The people's voice., 1939-12-20
Federal Trade Com.
Blows Up "6%9o''
Ford Financing

IOIu IlIldllCIHS L
In January, 1886, Ford Motor CON-
pany had announced the adoption of a
"6%" plan, which read, in part:
"FORD
ANNOUNCES S25-A-MONTH
TIME PAYMENTS
AND A
NEW UCC 6go FINANCE PLAN
Any New Ford VS. Car
Can Now Be Purchased for $25 a
Month with Usual Low Down-Payment
Your cost for this extension of
credit is only one-half of l percent
month on your original unpaid
balance and insurance. This plan
reduces financing charges for IL
months to percent. For example,
il you owe a balance of $400 for
your car and insurance, you pay S24
for the year of credit; If the bal
ance is 5000 you pay s12. Your
credit cost for one year is the ori-
ginal unpaid balance multiplied by
6 percent
In April, 1897, Universal Credit Cor
poration, correspondent with the Ford
Motor company. and originally incor-
porated and organized by the Ford
Motor company for the purpose of
furnishing credit to its dealers and
retail purchasers, and which later was
sold to the Commercial Investment
Trust company, New York, entered
into a stipulation similar to that
agreed to by the Chrysler Corpora
tion and other companies with the ex-
ception of General Motors and Ford
Motor company, to desist from using
advertising matter or furnishing deal
ers with advertising matter in which
the expression "6%" is used, without
equally prominent use in direct con-
junction Herewith, of explanatory
language making clear that "6@c" does
not refer to or indicate percent per
annum simple interest; therefore the
case against Universal Credit Corpor-
alton was dismissed as to that COM
pany.
All the concerns executing stipula-
tions have carried them into effect,
and testimony before the Commission
and the Commission finds,
that should Ford Motor company
again commence the advertisement of
a "6%" plan, it would result in plac-
ing the companies which have here
tofore desisted from this practice, at a
disadvantage in the indus
try.
The orders of the Commission
against General Motors Corporation
and its subsidiaries, and Ford Motor
are identical in requiring
that each forthwith cease and desist
from
[. Using the words "six percent" or
the figure and symbol "6%", or any
other words, figures or symbols in
dicating percentage, in connection
with the cost of, or the additional
charge for, the use of a deferred |
or installment payment plan of pur-
chasing motor vehicles, when the |
amount of such cost or charge col |
lected from, or to be paid by, the |
purchaser of a motor vehicle under
such plan is in excess of simple in |
terest at the rate of 6@o per annum,
or at the rate indicated by such |
words, figures or symbols, calcu-
lated on the basis of the unpaid |
balance due as diminished after
crediting installments as paid;
. Acting concertedly or in co-opera-
tion with any company, firm or in
dividual or with any of its agents
or dealers, in way calculated to
further the sale of motor vehicles
through use of the methods referred
to in paragraph Q) of this order.
Originally the complaint in this pro-
eeding designated The Chevrolet
fotor company, Olds Motor Works,
'ontiac Motor company, Buick Motor
ompany and Cadillac Motor company
S correspondents with the parent
General Motors Corporation.
'hese five subsidiaries, however, hav-
lg been dissolved in 1886 and their
lnctions taken over by the General
lotors Sales Corporation, the COM
laint as to them was dismissed. The
eneral Motors Sales Corporation is
OF joined as party respondent but
ne order of the Commission specif- {
ALLY applies to cars sold by General
Iotors through any subsidiary. u
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