Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-09-25
HOMES ON INSTALLMENT PLAN
HAD ORIGIN IN WASHINGTON
First Project, Handled by Old Home Saw
ines Bank, Included Every Reasonable
Precaution by Financiers.

collection, their second trust notes.
This was done as a means of tying
more closely the builders to the insti-
tuition, as they were excellent pros
poets for business in other depart
ments. and brought to the institution
numbers of people who were making
regular payments through us on the
notes left for collection.
/ We found that in many instances
purshasers after settling the full
amount of their second trust would
make an application to a building and
loan association for n monthly pay
ment loan, and in consequence we
would lose this customer both as
borrower and a depositor.
For such cause we finally decided
to adopt a monthly payment plan of
loan, which we felt would be an inn
provament over that of the building
and loan associations, and in this
manner keep on our books the bust
ness which we had originally secured
Monthly Payment Plans.
AS result there came into exis-
lance with the institution this month
ly payment plan of loan. We made
loans up to IS per cent of our ap-
praised value Of the property, which is
and loan associations. We required
a payment of l per cent per month
of the principal amount of said loan,
which payment included principal
and interest, and we also provided in
the note and deed of trust the priv
ilege of making larger payments in
multiples of SIS up to 500 per
month, thereby encouraging the Dor
rover to reduce his loan as rapidly as
possible.
AS we figured interest on the balance
OF the principal remaining unpaid
each month, the amount paid on
account of interest decreased each
month, and accordingly the amount
pald on account of principal increas
co. so that the borrower paid inter
est only at the rate of per cent at
any time on the loan. These loans
as a result. pay themselves out in
about eleven years and seven months
FOLDERS were issued from time TO
Tune describing these loans, and sent
10 ACKNOWLEDGEMENTS and borrow.
ers-and as result we have held
most or the loans which might have
oeen paced elsewhere. This is being
continued today, with the Same sue.
cess as experienced in the past.
The Advantages.
Certain advantages accrue through
the INTRODUCTION of this monthly paw.
ment plan. No matter what the rate
of interest might be on term loan
we are assured OF a number of such
| monthly payment loans covering the
ABOVE period of time, at 6 per cent
interest, and we have, therefore. en-.
coufaged such loans on that basis. An
analysis Will show that taking into
consideration other charges made on a
term loan, at even a lower rate of in.
| terest, there is little difference in cost
between the two types of loans to the
borrowers. AS is the rule with most
loanlng agencies, we make a charge
or commission for term loans. but
make no charge of commission for this
monthly payment plan Of loan, and
tHdt' 100, mas been another encourage
ment TO such borrowers, as 1t is not
necessary for them to make renewals
from time TO time, as they would on
the regular term loan,
During our years of experience with
this loan plan we have had occasions
arise whereby individuals have desired
10 reduce their monthly payments
after certain amount of the loan ha
been paid, and we have been. able to
allow this reduction in cases that
were believed entitled to this privilege.
All of this business has been particu.
larly satisfactory in Washington, where
there are so many Government en-
ployes, whose compensation is small,
and where it is almost impossible for
| them to save out of their salary.
When they are in position to pur.
chase home with small cash paw
ment, and make their monthly paw
ments on basis similar to rent, this
plan has undoubtedly proved to their
benefit.