Evening star., 1926-12-05
EXCESSIVELY EASY CREDIT
VITAL FACTOR IN AUTO TRADE
Inauguration of Better Financing System
Held as Benefit to Both Buyer and
Seller-Stabilizing Under Way.

As evidence Of how stringent tho
credit men are. becoming. 1t Is sig
nif1cant to note that only the appllca
tions sent in by dealers acceptable 20
the insurance companies are consid
cred. and that because Of heavy depre
citation certain makes of cars are not
desirable as credit risks.
Under the most approved plans for
financing. the automobile dealer Is
paid In large measure for the car he
has sold almost soon enough to CON
slider it a cash sale. He has no further
worry. provided the account is a good
one. If 1t proves to be otherwise and
he has been instrumental in giving
credit to some motorist who does not
deserve 1t, he has no immediate loss,
but he should heed the lesson so
plainly shown. He knows that II this
sort Of thing happens too often he
will lose his credit connections and
that he will be attempting to sell new
cars against very good repossessed
ones.
The public. for the most part. is
backing this movement for moro
restricted credit because II sees that
financing losses must be shared by
all who seek credit. 1t Is an exact
parallel with automobile insurance
When more persons allow their cars
to be stolen, theft rates must he
higher.
Insurance companies which guar
antee the bankers against loss
through the motorists defaulting on
his payments seemingly bear the
burden Of the losses. but in reality
It Is the credit user--the car owner.
who pays the piper. He is the man
who foots the finance charges. and
they must be sufficient to meet the
needs.
Tightening Of Credit Favored.
Even the motorist who does not
buy his car in installments favors a
Tightening up of credit and looks
favorably upon the reports from
large automobile credit centers that
conditions are being placed on
sounder basis.
The cash purchaser knows he bene
fits, as does every one else, when
more cars are manufactured and sold
He appreciates the depressing effect
on trade of a surfeit of repossessed
automobiles in the used car market
He wants to see the public able 10
pay for it's cars. because he realizes
that only when people are financially
able to own them can they keep them
in use. wear them out and keep car
1t Is not healthy for the economic
situation as whole to be able to
purchase a $4,000 vehicle for 81 500
just because it has been repossessed.
That upsets used car values. II over
turns a definite and correct industrial
standard. and that never has been
worth while in the long run.
1t means, also, that good merchan
disc stands idle and slows up trade
or it goes into the hands of the public
at prices so low that the demand for
the full-priced new car is lessened
What is more detrimental to business
is that the original owner of the car
has spent at least one-third of tho
delivered -and-equipped price of the
car. and possibly one or two install
ments, and then owns nothing. This
process puts him back year or two
in the purchase of another car. He
is lost to trade for the period Of his
financial recovery.
Automotive credit Is becoming
stabilized. and every one is going to
benefit as result.
Through sound business. rather
than loose credit. the prospective
motorist is being helped in joining the
ranks OF Americas 10000 900 devo.
tees of the winding highway.
tCopyrTht. 1921