Evening star., 1959-11-07
CARS
CARS
GypFinoncing Thrives
Under District Lows
Continued From First Page

Continued From First Page
by a Maryland finance COM
pany. When the Maryland firm
set up a finance company here
in 1855, he worked for it. He
was also secretary-treasurer of
q Maryland-incorporated used
car firm and owned a so per
cent interest in another Mary
land Incorporated used car
firm-both of which moved into
Washington at about the same
time.
In 1856 he became president
Of a new finance company Or
ganized here. At the same time
he became secretary-t treasurer
of a new agency serving as an
insurance broker for policies
written for the finance COM
pany's customers.
A year later the finance
company established as a wholly
owned subsidiary an insurance
company organized in South
western State. The insurance
company is not licensed to do
business here but repeatedly
gets the Washington business
by reinsuring policies for firms
licensed to trade here.
Dealer Explains
He has now become president
of another finance company.
One of the other stockholders
In this newly organized COM
pany is a Baltimorean con-
nected with two other used car
lots established here within the
past year. @
What do the most complained
about used-car dealers and A.
nance companies get out Of
these interlocking setups? They
get the used-car buyer coming
and going.
One of the notorious used
car dealers boldly explained it
himself the other day when a
legitimate dealer asked him
how he could afford to pay so
much for cars bought in whole
sale lots.
"Oh, we make our money out
of finance charges, he replied
airily.
He went on to say that he
usually gets the cars back
pretty quick when buyers are
stuck with pickup payments
they can't meet.
The tie-ups between dealers
finance companies and wholly
owned insurance companies
work this way:
The dealer induces the used
car buver to get a substantial
loan for a down payment.
Then the dealer writes a con-
tract with a finance charge ct
the rate of 20 per cent or more
a year, credit life, health and
accident insurance charges at
double or more the usual rate
and a schedule of irregular
payments" that may include
several 500 lump-sum pay
ments in addition to the regu-
lar monthly payments.
The dealer assigns the in
flated contract to his partner,
the finance company. Frequent
ly it is not until the used car
buyer gets his notice from the
finance company that he real
ICES he has been hooked" by
an unscrupulous dealer.
Lapse Loses Car
The finance company let's
the buyer keep the car for a
few months to sweeten the deal.
Then, If the buyer is one day
late in making his monthly
payment-or runs head-on in
to an unexpected lump-sum
irregular payment" the A.
nance company snatches the
car. A typical buyer reported
that he got to the finance Of
flee too late on a Saturday to
make his payment and figured
he would make it on Monday
because the Office was closed
on Sunday. On Sunday night
his car was reposSesSed.
The finance company then
either charges a $50 fee before
the buyer can get his car back
or promptly sells it for only a
fraction of the cost to the same
dealer or another one also as
sociated with the same finance
company. Then the owner who
lost his car is sued for the diff
ference between what he owed
and what the finance company
got for the car. At the same
time. the dealer now owning
the car sells it and the business
starts all over again.
The same car may be sold a