Evening star., 1941-08-31
Unlimited lnsiaNmenI
Credit Terms Illegal
Starting Tomorrow
Questions and Answers
Given on New Setup
For Consumer Buying
BY the Associated Press.


BY the Associated Press.
The 81 down and 81 every
month" era virtually disappeared
yesterday from the field of consumer
buying.
Under Federal Reserve Board rules
drafted at President Roosevelt's Or
der, 1t will be illegal starting to-
morrow morning for stores, banks,
finance companies or other busi-
nesses to give unlimited installment
credit terms to consumers.
On a question-and-answer basis,
here's the situation:
O. Do the rules apply to all con-
sumner transactions?
A. No. Cash and ordinary charge
account transactions are exempted
altogether. The rules apply only to
specified installment sales or loans.
@. What are the restrictions?
A. Minimum down payments and
maximum time to pay the balance
are specified in each case.
18-Months Limit.
@. How much time is allowed to
complete payments?
A. The limit is 18 months from
the date of purchase except that
''lay-aWay" purchases are dated
when the goods are taken home).
G. How much down payment is
required?
A. Thirty-three and one-third per
cent on automobiles, airplanes, pow
er boats, boat motors. motorcycles;
20 per cent on mechanical refrigera-
tors, washing machines, ironers, sue
tion cleaners. cooking stoves and
ranges, heating stoves and space
heaters, electric dishwashers, room
cir condtioners, sewing machines,
radios and musical instruments made
principally of metal; Is per cent on
furnaces and heating units for fur
naces Including oil burners, gas
conversion burners and stokers. wa
ter heaters, water pumps, plumbing
and sanitary fixtures. home air-con-
diJioning systems, attic ventilating
fans; 10 per cent on furniture, pi-
amos and electric organs.
Q. Do the rules apply to the cost
OF labor and materials for repair
ing or improving home?
A. Yes, if the cost is under 81 900.
No down payment is required. but
the loan must be paid off in l8
months. Also if one of the restrict
ed items listed above-a new fur
mace, for instance, is installed-that
item must be paid for as if it were
purchased separately.
House Purchases Exempt.
@. Do the rules apply to the con-
struction or purchase of a house?
A. No. Transactions involving
o complete house are exempt.
@. Are cash loans restricted?
A. Yes, if the loan is under 81 900
and is to be repaid in installments.
Eighteen months is the limit
@. Are farm implements involved?
A. No. Nothing which was not
named specifically above is affected
Furthermore, cash loans for farm
ers to be used in the business of
farming also are exempt.
@. Does the furniture restriction
cover such things as curtains?
A. No. Floor, wall and bed cover
ings and draperies are exempted, but
furniture" does include ice boxes,
bed springs and mattresses.
@. Can a university student still
borrow money for his education
without the restrictions?
A. Yes, loans to students are spe-
cifically exempted.
@. What provision is made for
family that may have 70 borrow
money to pay emergency expenses?
A. Exemption is made on loans to
pay medical. dental, hospital or
funeral expenses if the borrower
can show the limitations would work
q hardship.
Old Debts Not Affected.
O. What do the rules say about
past installment contracts, particu-
larly if a consumer buys more after
tomorrow and wants to consolidate
the two debts?
A. Old debts are not affected, eX-
cept that after November l an old
debt consolidated with new, or an
old debt renewed or extended will
come under the rules.
@. Are the sizes of installment
payments regulated?
A. Yes. They must be OF ap-
proximately equal size and spaced
not more than month apart lex
ecept in minor cases.. Also, after
January l, the minimum monthly
payment will be S.
Q. What will happen to a store
that violates these rules?
A. It's license to give installment
credit Everybody gets a license
automatically to begin with may be
revoked or suspended. Then, If
some one is caught giving INSTALL
ment credit without a license he
may be prosecuted under a World
War law, which has maximum pen
alties of 10 years in prison and a
fine of $4,000.
Board to Administer Rules.
@. Who will administer the rules?
A. The Federal Reserve Board
IN Washington with the help of the
u Federal Reserve banks and their
"a branches throughout the coun-
try.
@. Are these rules permanent?
A. No. They are subject to change
at any time. Later, if it chooses,
the Federal Reserve Board is au-
thorized to regulate charge ac-
count and other consumer credit,
If it desires, or it can add or delete
items on the restricted list, change
the down payments, or length OF
time to pay.
@. What is the purpose of the
regulation?
A. To conserve materials for de-
fense and to prevent imitation.