Help for poor credit car buyers with new device

It can be quite difficult to buy a car if you have a poor credit history. Lenders don’t want to take the risk that you will drive off with their car and never bee seen again. A relatively new device, the starter interrupt, makes it possible for more people to buy cars who otherwise wouldn’t be able to afford them.

More below.

Starter interrupt device helps people buy cars

Buying a car is expensive enough for anyone, but if you have bad credit, it can be a nightmare. Assuming that you can find anyone willing to lend to you at all, you may find that the interest rate charged by the lender is astonishingly high, even when buying a used car. In some cases, people with poor credit scores find themselves paying interest rates as high as three times that of buyers with good credit. And those are the lucky ones. Others find that they cannot buy a car at all, as lenders deem their shaky credit histories as a poor risk.

That’s changing as a relatively new device, the starter interrupter, becomes more widely used by car dealers across the country. The device, a small electronic box about the size of a cigarette back, connects to the ignition circuitry of the car and requires a numerical code to be entered into a keypad once a month. If the buyer makes their car payment on time, the lender provides the key number and the buyer can enter it into the keypad. If the payment isn’t made, the buyer doesn’t receive a code and the car won’t start.

And that is that.

While it may be a bit of a nuisance to enter a code once a month, it’s better than not being able to buy a car at all. And some buyers who might have qualified for a loan anyway find that they are able to receive lower interest rates on their loans if they agree to have the device installed in the car. For most people, the inconvenience is worth it in terms of the lowered payments. 

The interrupt devices are primarily made by three companies that specialize in anti-theft devices. There are currently about one million of them installed nationwide, and they continue to grow in popularity as dealers realize that the devices increase the number of potential buyers for auto dealerships. With fewer people likely to default on their loans and steal the car, dealerships can extend loans to more buyers while lowering their overhead costs at the same time.

The devices are not cheap; they average about $250 apiece. On the other hand, that’s a small price to pay for a reusable device that protects a car valued in the thousands of dollars. The units have proven to be effective, as only about 2% of all buyers who have the devices in their cars default on their auto loans. This is quite an improvement over the 15% of borrowers who default on loans when the devices are not installed.

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