If the industry’s numbers are correct, the devices actually change the payment behavior of buyers with impaired credit. That changed payment behavior, if reported to the credit bureaus, will actually improve the buyer’s credit rating, paving the way for future credit purchases. It will probably also improve the buyer’s self-esteem, as well, but things like that are hard to measure.
The buyer’s changed payment behavior also reduces the dealer/creditor’s collection expenses and its losses from delinquencies and charge offs. Assuming that some part of that savings can be passed to the buyers, the devices create at least the potential for lower financing costs for those with severely impaired credit. Once the buyer has established a better credit record, future credit should be less expensive as well. Moreover, the buyer’s credit availability may expand to other types of credit previously unattainable, such as credit cards and housing finance.
Even for those buyers who are unable to get it together, even with the devices attached to their cars, there are benefits. If a buyer fails to make a payment on time and the car is equipped with a starter interrupt device, the car won’t start, but the creditor doesn’t send the tow truck out to repossess the car and tow it to the repo lot – billing the buyer for the repossession and storage costs. And the customer whose car is fitted with the starter interrupt device is spared the sometimes considerable inconvenience and indignity of trekking down to the repo lot to bail out his ride.
Will these points persuade the consumer advocates in your jurisdiction that starter interrupt devices are good for consumers? Perhaps so, perhaps not, but they won’t be persuaded unless the case for these benefits is made, and they won’t be persuaded unless these purported benefits of the devices are actual and not just industry smoke and mirrors.
That is why we urge dealers who use starter interrupt devices to do a few key things. First, the dealer should reward those consumers whose payment behavior actually changes when the devices are installed. If a dealer can show that a buyer benefits, either by more favorable credit terms in the initial credit sale, or by better terms on a subsequent credit sale, the dealer will defuse criticism of the devices. Likewise, if the dealer reports improving credit histories to the credit bureaus, providing a really tangible benefit to a buyer who deserves it, the dealer’s use of the devices will be harder to challenge. Finally, dealers who do not attempt to impose (sometimes) bogus fees and charges upon repossession can make the final argument above – that the consequences of nonpayment are less burdensome with the devices than without them.
Consumer advocates who are willing to listen might actually find these arguments in favor of the use of the devices to be persuasive. Even if the consumer advocates aren’t persuaded, though, these not-so-intuitive points may be worth making to legislators, regulators and other sometimes-hostile-to-dealers folks.