The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1916-04-02
NOW SELL AUTOS
ON INSTALLMENTS
AT Least Five Makers Have
Adopted Popular Part
Payment Scheme.
ON BUSINESS BASIS
Well-Estabhshed Banking Firms Back
of Neutrality-suspicious.
Increases Sale Of Cars.

The selling Of automobiles on the
part payment plan with the balance
at stated intervals has become a popu-
lar method of purchasing cars among
a large class Of motorists. At least
I'VE makers have already adopted the
system and II is predicted in the
trade that other concerns will follow
with similar arrangements. AS IL is
many firms which have not as yet an
nounced the time payment scheme as q
policy are allowing their dealers to
sell cars with a large part of the
price down and the total balance at q
later date.
The installment plan is worked on
a strictly business basis. Notes for
payments are signed by the pur-
chasers and these are sold to credit
companies.
General Idea the same.
In most cases the car maker has no
financial interest in the credi. COM
pany that buys the notes taken in by
the dealers. but the maker has simply
made the proper arrangements SO
that the dealer may do this class OF
business on a proper and logical basis
In every case so far made public, an
old and firm banking house is back
OF the arrangements, and while the
plans differ considerably in their de-
tails, they follow about the same gem
eral idea Of having one-third to one
half of the price Of the car paid down
and the balance in eight monthly pay
ments.
The banking firm then buys these
notes from the dealer. Hence the
dealer has a ready outlet for this
paper and does not have to use his
local credit for the purpose. I'm
doubtedly the installment idea will in
crease the sales of cars, for it opens
up that field in which there are many
who have enough to buy q car. but
cannot pay for II all out at once.
Up to a short time ago II was gen
orally thought that cars could not be
marketed successfully on the INSTALL
rnent plan basis, because II was be-
Heved thers was too much risk OF dam
age and depreciation to the vehicle be-
tween the time OF first payment and
final payment. However. the new ar.
rangement seem to overcome this DIFF
fculty.
Helps Auto Dealers.
The wider use OF cars by the general
public and the need of an adequate
method OF doing such business as To
save the dealer from haphazard meth
ods that might lose him much money
or even wreck his business have decid-
ed some of the big producers of cars to
make arrangements with banking inter
ests to finance such transactions.
Doubtless the great earnings of the
motor car makers during the past year
and the constantly increasing market
for cars were big factors in bringin G
TO the attention Of big banking houses
the matter OF financing time sales, just
as these factors have induced many
49, 49,, tr1I IN
the expanding motor car factories them
selves.
After the dealer has received one-third
or One-half Of the list price Of the car
and the note for the balance in eight
monthly payments, the cost Of insurins
the car against fire, theft and transpor'
tation loss Is added, as well as per cent
interest on the notes which the buyer
gives This is cash sum that must be
paid at the time the initial payment ii
made.
Then the dealer indorses the notes and
sends them to the banking house which
buys them from him less a brokera &c
charge that ranges from to 3 per cent
in most cases.
some of the Details.
In one or two Instances the banking
firm sends Immediately the entire amount
of the notes less brokerage. and in Others
an amount Of 800 to 500 is withheld and
the dealer given a deferred certificate
through the banking house when the Gus
toner has paid the last note. or IL h
wishes he can use 1t Immediately, sending
it to the car manufacturer who will &C
cept it on the purchase OF more cars
less a discount of 5 per cent.
For this kind of business the plan lstc
down usually specifies the kind OF per
son whom the dealer can sell in thi:
deferred payment basis, and since he in
dorses the notes ne Is reasonably SURF
TO satisfy himself that the party Is able
TO pay for the car as agreed. Certain In
vestigation procedure is given the dealel
and usually all the necessary forms anc
notes are furnished him 50 that the sales
are made in a strictly uniform manner
and in accordance with the rules tbs
dealer is instructed to follow. He viii
Of course. follow them as he wants tbs
notes TO be taken by the credit firm.
Are No Restrictions
In most instances the plan does not in.
terfere with the dealers local bankins
arrangements and there are no restric.
tons If he wishes to finance the install
ment sales through his local bank. Usual.
" the dealer needs all of his local credit
for taking in the shipments OF cars a.
they come from the factory, and the new