Evening star. [volume] (Washington, D.C.) 1854-1972, 1957-03-19
Auto Finance
Gouges Barred
To Senators

A Better Business Bureau off.
cial said today the laws of many
States permit what he called
gouging by finance shark!
through high interest rates tt
auto buyers.
John l.. O'Brien of Akron
Ohio, in testimony prepared fol
the Senate subcommittee or
lAutomotive Marketing Practices
said what he called excessive
interest and other auto finance
gouges are permitted under the
law in all but Is States. The
subcommittee is headed by Sen
ator Monroney, Democrat OF
Oklahoma.
Noting at the beginning that
he is not criticizing the thou
sands of reputable automobile
dealers and financial institu-
tions." Mr.. O'Brien said that
nonetheless he has reports of car
finance gouging in as United
States cities. He did not name
the cities.
Practices Barred
He listed these contract pack
ing" practices as outstanding
among dishonest car dealers and
finance companies, as described
by better business bureaus in the
reporting cities:
Getting customers to sign
blank contractS-with details
unfavorable to the customers,
filled in later. This. he said. is
the mo. l problem in the coun-
try.
No down payment" advertis-
ing-"Almost invariably untrue"
he said.
Charging nearly full interest
rates to customers who pay of
notes long before they are due.
New Charges imposed on Gus
toners after they believe they
have paid off their obligation.
ReposSessing cars from persons
unable to make payment. then
requiring the customer to pay
the balance.
Charging different finance
rates to different customers.
ID. C. Has Some Protection
Mr.. O'Brien listed the following
Is States where he said laws give
some protection to individuals
buying cars on installment pay
mentS:
California, Colorado. Connecti-
cut. Indiana. Maine, Maryland.
Michigan. New
Jersey, New York. Nevada. Ohio.
Pennsylvania. Utah, Wisconsin
and the District of Columbia.
There was no specification
about this as to Washington. but
Mr.. O'Brien told the subcom-
mo down payment offers
usually appear as an advertising
practice which leads to unsound
financing arrangements. either
through side notes or sometimes
through balloon notes. a psrticu-
larlv vicious if relatively infre-
quent practice, which has been
reported by 10 of our cities.
In this practice. effected often
through the medium of the blank
contract, the customer signs UP
for what he thinks is a reason
able number of modest payments
say IL to Is. at $50 a month
but the final payment. at the
end Of the period, may be $500,
81 900 or $500. which stagger-
ing amount must then be re-
financed for another period Of
time"
Avoided by Most
Mr.. O'Brien told the subcom-
mittee that balloon notes" were
avoided by most finance COM
panies because they we're in
IAN extremely poor
risk" as the purchaser had rela-
lively little equity in the car he
was buying.
However. they still present a
rich If risky field for the avari-
cious few who are willing to prey
so unfairly upon the unsuSpect-
ing, the witness concluded.
Waiting to testify were Albert
F. Jordan. superintendent of the
District Department Of Insur-
ance. and Leland F. Mccarthy.
director of the Washington
Better Business Bureau.