Evening star. [volume] (Washington, D.C.) 1854-1972, 1959-11-03

| Then we get the $1,000 financed
through a bank"
I asked about finance charges
ealing them interest"
which they're not-and insur-
ance charges.
THAT'S all arranged by the
bank" he said. I'VE have
nothing to do with that"
"Well. can you explain how
much I have to pay q month";"
I asked.
"How much can you pay?"
I told him SIS.
He said that was all right
and that the payment would
be reduced In six or seven
months. He said the SIS pay
ment would ccver both loans.
could you just give me an
idea Of how much 1t will all
be?"
He rapidly calculated on an
other sheet Of paper. He fig-
ured the interest at 8 per
cent" would be 500 a year or
$3.50 for two years. When I re-
minded him about insurance.
he figured that at $44 q year or
$88 for two years. Then I did
some arithmetic Of my own
dividing the total by SIS o
month. When it became appar-
ent that I would have to pay
longer than two years-partic-
ularly If. as he said, my pay
ments would be lowered-he
hastily moved up the term of
payment to 80 months. Then
he threw that sheet Of calcula-
tons away.
Now, I had the answer to my
question. I knew why people
think they are paying one
amount and actually see the
contract for that amount-but
wind up by paying close to
twice as much as they origi-
nally bargained for. The an
swer: Two contracts.
Trap stiIl Inspiring
I had. asked more questions
than the more trusting Gus
toners, but on the basis Of his
answers I could still have got
ten trapped. Where had he led
me astray?
He knew I couldn't get bank
financing and he. never in
tended to arrange it for me.
He knew he would wind UP
by arranging the financing
through a finance company
closely associated with his lot
and that the finance charges
alone would be closer to 20 per
cent than the 6 per cent he had
figured out for me.
He knew that once the
finance company had my note.
the payments would not be
lowered in "six or seven
months" as he had, promised
me.
He knew that the insurance
coverage would include credit
life and probably health and
accident insurance along with
physical damage insurance and
that those combined charges
alone would run into hundreds
of dollars.
He knew that my combined
payments on my small loan
and the big note could never
be as low as SIS a month for
even 80 months as he had rep
resented.
But the contract he offered
for my signature showed I
would owe $1,494-the cash
! price Of the car minus a 81
! down payment.
None Of the charges we had
: been discussing was on that
, contract.
: Suppose I signed. ! knew and
: he knew that I couldn't fork
I up 81 ,494 in a week.
Definite Pattern
Dozens of complaints I had
been studying presented a def
, mite pattern for the next step.
The used car dealer knows
when he accepts a 81 down
payment that no finance COM
pany will finance the entire
balance. A pickup payment"
of 500 won't satisfy the
: finance company either.
Usually, the finance company
demands a down payment of
one-third of the value of the
car before it will finance the
balance. This may vary from
20 I'd 40 per cent depending
on the car buyers credit-how
good a risk he is.
So money has to be raised to
bring the down payment up to
the point where the finance
company will be willing to
, finance it.
When the buyer comes in
with his 500 pickup payment
, as ! had said I would do-a
salesman drives him to a small
, loan establishment, usually in
Maryland. That is what the
close-out man meant when he
said he would arrange a SEC
, ond mortgage like on a house"
for me.
:. while the handful of I'M
! scrupulous used car dealers in
the District choose Maryland
: small loan companies for this
phase of their operation. Mary
!. land used car dealers operate
Z under the restrictive Maryland
law which controls the amount
.. of financing that may be
! charged.)
AS soon as the car buyer
drives away from the small
loan place. the salesman de-
mands that he indorse the
small loan check over to the
used car dealer.
Now, the salesman takes the
= buyer back to the lot.