Evening star., 1925-07-12
Financing of Auto Sales
Calls for Very Large Funds
Ho,U Great Producing Companies Aid
Business-Some Important Factors
Brought Out-Banks Great Help.

notlceaDle, no company Undertaking u
enter all fields.
Here we have found but one loca
| company specializing in open ac
| counts It's operations were at its
| inception rather unfortunate. How
ever, it is worthy of note that re
| organization of it's personnel has
| shown marked improvement, and the
| company Is making rapid strides for
| ward, having regained the confidence
of the banking fraternity.
THE field of epdeavor of the prom
| inent District of Columbia companies
has in the main been directed to the
purchasing of first and second trust
notes and the making of construction
| loans.
Great Help I'm Building.
The companies are certainly lend
| ing a valuable help toward the de-
velopment of building operations in
the District of Columbia, and have
| made it possible for the builder tC
make a turnover. thereby aiding ir
| a continuity of operations.
"A survey of the principal finance
and mortgage companies present bor-
rowings would indicate that they are
at this time obtaining additional CAPT
tai through the medium of bank loans
which means of obtaining additional
capital to meet their needs is un-
ldoubtedly more profitable, it being pos
sible for them to hypothecate their
real estate notes and borrow against
the same on a basis of per cent.
However, upon careful inquiry we
were agreeably surprised to learn that
none Of the companies were extending
their borrowing beyond their reason
able requirements. and this far below
| the credit limit allowed.
The collateral trust note offers an
attractive Short-term loan with self.
| Iliquidating collateral. This form of OBJ
tanning credit Is highly recommended
however, provided all elements are
contained looking to the quality, kind
and self-liquidating obligations held as
security back of the certificates
registered with a bank or trust com.
pany sufficiently equipped and ex-
perienced to act as trustee"
So much to the credit of the finance
| companies of today.
Maintain Close Contact.
Bankers maintain close contact with
| the actual conditions of finance cor.
| porations with which they do business
! They want to know that bad and
doubtful accounts have been charged
off; If any of the assets of the com
pany have been pledged or discount
/ ed and. if so, when and why; ma xi
mum liabilities on loans, discounts
acceptances, ETC.; what part of assets
are represented by unpaid installments
| or second-trust notes more than SO
days past due, according to original
terms of contract, and many other
| highly important queries in forming
an opinion as to solvency.
Some Agents Handle Own Credit.
| Returning again to the question O
| automobile financing, it must be re
membered that some of the largel
agents of the manufacturing com
| panies are strong enough in theil
financial and credit resources to care
| for their installment transactions
These companies must keep theil
credit on a high basis. New cars il
! warehouses or on the floor of a sales
room are accredited as good security
| for so per cent of factory price cost
fob.
If you had trust note secured b,
new automobile, you would natu
rally want to be sure that il remained
unused and safe. Therefore. as a banl
examiner walks into a bank and in
vestigates, so representatives of bank!
walk into agencies of this or tha
car No, say, 236. 1874. This and Other
numbers on the bank list. II they ar,
| not Immediately available, irnmediat,
payment of account Is insisted upon
accompanied with explanation in delay
in making returns.
Over 1900, 900 Autos i'm Use.
There are 17.74O,oOo autos in use.
When properly secured auto financ
q n IN ho t. l.. l.,
true that while the finance corporation
has improved the situation, the gen
eral automobile agency is much
stronger than the agencies of last
! decade.
AN automobile dealer to succeed.
the report to the bankers concluded
must be good business man as vel
as a good salesman. and the better
business man he is the better chance
he has of succeeding He must, OF
course, have the agency for a car OF
merit and have sufficient liquid capita
IN his business to operate. The lacl
of sufficient capital is the creates,
handicap of the automobile dealer to
day. Unquestionably the banks ir
Washington, and. in fact, all over the
country. are using greater care ii
loaning to automobile dealers who lacl
enough capital in their business tt
take care OF their current needs.
Car for Every Seven People.
I'm a recent issue of the Busines:
Conditions Weekly of the Alexander
Hamilton Institute. it is stated tha'
the automobile output in March, 1925
probably exceed 100000 cars. as com
pared with $4,000 in February, 241
600 in January and 209, 900 in Decem
ber. and the total output for 1924 wa.
3,63S,o00 vehicles. This same weekl,
further estimates that there wer.
about 100000 automobiles in run
ming order in the United States a
the beginning of 1925. or the equiva
| lent of one car to every seven people
! Figures indicate greater number o
automobiles per capita in the Distric
of Columbia than in any State excep