"We understand there are times when there has been no established credit and you had no opportunity to obtain credit. We also understand sometimes bad things happen to good people, and reasons such as these can cause credit problems," he added.

Most people who finance their cars through a bank and pay their instalments on time ask about how this system will effect their vehicle's performance, and how they can remove it after paying all the instalments.

"It is important before we accept this system to know if it will effect the performance and what will happen if the car has an accident," said Mohammad Al Baali, Managing Editor of Dubai-based Insurance magazine.

He added that insurance companies and banks would benefit a lot from systems like this.

"Financial institutions and car dealers should explain to people that the system will not affect their cars, or they will not buy cars with these systems," he added.

On the other hand, some car buyers did not welcome the system, saying it may not be legal and would intrude on their privacy.

Sayed Helmy, who financed his car from Dubai Islamic Bank, said he is serious about this system. "A system like that will support GPS technology, and no one welcomes people watching them or spying on their moves. I think it needs legal approval," he added.

"Our own market studies show that 80 per cent to 90 per cent of the cars sold in the UAE market have been financed by banks," said Hareb Al Hanini, Managing Partner of Special Sentinel Trading, On Time's Dubai distributor.

Al Hanini said On Time is manufactured under international quality standards and does not affect the cars' factory warranty. "Consumers are safe with the On Time device. Emergency codes ensure the customer will not be stranded."

He added that On Time will cost nothing.

"The system is owned and maintained by the lien holder or car dealer," he said. Listing the benefits from using it, he said: "More customers can qualify for purchases and finance programmes because the dealer or finance company now has payment protection."

Al Hanini said dealers and distributors have reported significant decreases in late payments and repossessions.

"So the next time your car won't start, they say don't bother calling the manufacturer breakdown scheme, try your bank first," he added.

"The On Time system has helped thousands of people with the opportunity to rebuild their credit," said Al Hanini.

"In this fast-paced environment we often need a reminder to help us prioritise and pay our bills. The On Time system will assist in developing good credit behaviour."

Dubai: It is early in the morning. You climb into your car, turn the key and ... nothing happens. What's the problem? Bad ignition? Dead battery? No, you haven't paid your monthly car loan instalment on time, and it won't start until you do.

Sounds ridiculous? But it's happening already in the US, and it will happen soon in the UAE.

Financial institutions, banks, and insurance companies are considering setting up the new payment protection system for their auto loans.

Dubai-based ERAD (Enterprises Rapid Application Development) plans to provide the system called On Time interlock device to banks and insurance companies in the UAE and aims to extend its presence to Europe and the Middle East.

"The On Time unit is fitted under the car's dashboard and features an electronic starter-interrupt unit that tracks payments, so if you're late with the money, you're not going anywhere," said Basel Al Salah, the 38-year-old Bahraini CEO who founded ERAD in 1999.

"With the use of On Time, we have been able to bring our delinquency to under 2 per cent from a high of 40 per cent. The dealers and banks associated with our programme and our product would not do a single deal without the device," he added.

Two banks in the UAE and an insurance company were very interested in the system and would sign an agreement with ERAD in the next few weeks to introduce it in the UAE, Al Salah said. He gave no details at the request of the banks.

There are more than 1.2 million On Time devices being used by car dealerships throughout North America, assuring payment on more than $2.6 billion of auto loans.

"Car buyers can now be given the opportunity to re-establish credit history and qualify for lower interest loans," said a representative of a UAE bank which is planning to use the technology.

"Our customers will pay because they need their vehicle and they are willing to accept direction and help with payment behaviour to get back on track," said the banker.