PayTeck’s New No-Pay No-Drive Automobile Shut-Off Box

By Alice Hill
RealTechNews

The repo man was so last century. At least that’s what a dealership in Viginina is thinking when it came up with a newer way to get high risk car buyers to keep making their monthly car payments - how about shutting off the car when you fall behind? As they put it, no pay, no drive.

It’s worked wonders at Norfolk’s Patriot Auto Sales, where nearly every car that drives off the lot is outfitted with a PayTeck Smart Box, a system that hands over a five-digit code in exchange for each payment. Come due date, the car won’t crank until the customer punches the code into a palm-size keypad wired into the dash. Patriot is the kind of operation that specializes in steeper interest, high-risk car loans. It advertises “no turndowns” — a corner of the used car business that deals with a “credit-challenged” clientele, as the industry puts it.

“Bad credit?” said Art Madden, Patriots general manager. “I’d be happy if they just had bad credit.” Not surprisingly, default rates are high. It’s not unusual for more than a third of the cars sold off such lots to wind up being repossessed. Since Patriot began using PayTeck three years ago, its repos have dropped from about 45% to less than 15%. Madden figures he has close to 500 of the $200 units on the road — an investment that has not only cut repos but boosted business. Source: USA Today

We say: Doesn’t sound very “patriotic”, but business is business.