Your Car Has Been Deactivated

By Mike Schuster Mar 25, 2009 2:00 pm

Engine disablers keep loans paid, customers fearful.

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Remotely disabling a car's engine isn't just for car thefts anymore: A few missed loan payments can now lead to a dead engine.

More dealerships -- including Honda (HMC), Toyota (TM) and other outlets -- have been placing remote disablers in vehicles as a protection against defaulted loans. The palm-sized device is installed under the dashboard and connected to the ignition. Dashboard indicator lights will flash as a warning, but, when the device is activated, the line to the ignition is electronically severed - leaving the driver with a few thousand pounds of useless metal.

Some disablers also come equipped with a GPS sensor for easy locating, which must take all the fun out of being a repo man. But unlike remote disablers used in instances of theft, these devices won't shut down the car while the engine is running.

The recent credit crunch has broadened the appeal of the device.

Once relegated to smaller used-car lots, engine disablers have been making their way to larger dealerships. With the device installed in their vehicles, merchants have an insurance policy when selling to customers with inadequate credit ratings.

But that's also to the customers' benefit: Those who wouldn't normally be eligible for a vehicle can now purchase one - and build better credit in the process.

Don Lavoie -- president and CEO of Sekurus Inc., which manufactures the On Time disabler -- referred to the technology as "a behavior-modification method." Speaking with the Wall Street Journal, Lavoie alluded to the way customers view cell phone and car payments differently: Since cell phones will cease to work once the owner stops paying the bill, the incentive to honor the monthly terms becomes greater. With the disabler installed, Lavoie says, auto-loan payments move up on a customer's list of priorities.

This form of loan insurance has proven very popular for Sekurus: Sales of the device increased by 25% in 2008 compared to the previous year, and the company expects to sell double this year.

Some consumer advocacy groups are up in arms over the technology: The Consumer Federation of America accused the devices of increasing surveillance to unsettling levels. The organization also fears situations where a driver is stranded because a payment may or may not have gone through.

Despite the issues of privacy and accidental shutdown, these disabling devices could become the norm - and maybe not just in cars.

Think about that the next time the ink starts disappearing on an overdue library book.

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