Evening star., 1960-03-09
Ceilings Raised
By Committee
In New Action
BY MIRIAM GUTENBERG
Star Stan Writer


inally in the measure.
The bill now goes to the
House floor for action at the
next District day-now sched-
uled for next Monday.
Committee Chairman Nc
MILAN said the rates approved
by the committee last week
prompted numerous complaints
that they would drive the
automobile business out Of
Washington and make it impos-
sible for buyers to get their
cars financed.
Corporation Counsel Chester
Gray had led the opposition to
the lower rates as "confiSca-
tory" and had pointed out that
the rates proposed by the Com
miSSioners were lower than
neighboring Maryland and
compared sfavorably with the
finance charges in the nearly 80
States where car purchases are
controlled by finance laws.
Other Changes
The committee, focusing all
of its attention today on i'm
provements in the auto finance
bill, also approved an amend
ment to strengthen provisions
of the bill outlawing pickup
payments" and balloon notes."
Pickup payments" are those
demanded of purchasers after
the down payment to raise the
deposit to the point where the
car can be financed.
Balloon notes" are large.
and frequently hidden, lump
sum payments that can con-
front buyers after they have
been paying of on their cars
AOI GWO years.
Both pickup payments and
balloon notes were among the
unethical practices exposed in
The Stars Buyer Beware"
series on Washington's used-car
racket.
The Commissioners had pro.
posed a more flexible provision
on these payments, explaining
that they might want to make
exceptions to enable groups
With special psy problems to
get their cars financed. Hg
Confer ON Draft
The Corporation counsel's
Office, however worked with
Senate and House staff men,
oers on a new provision after
LEGISLATORS in both the House
and Senate said they wanted
to write a specific ban on these
types Of payments into the new
law.
Spokesmen' for the armed
forces were particularly en-
phatic in urging such a ban
because servicemen have lost
their down payments when
they couldn't meet unexpected
pickup payments" and have
lost their cars when they were
faced by balloon notes."
These are the main pro-
visions of the bill as it awaits
action:
The maximum finance charge
on new cars is fixed at So per
SlO0 per year. The charge on
cars up to two years old is
fixed at S1l per $100 per year.
The charge on cars two to
four years old is fixed at $14
per $l00 per year. The ceiling
on cars over four years old is
SIS per 500 per year.
The rates approved last
week and abandoned on recon-
sideration today range from 81
to $6 per 500 per year.
Ban Is Included
The ban on pickup and bal.
loon payments is accomplished
by requiring that installment
payments must be made in
substantially equal amounts
and at regular intervals.
The exceptions to the ban
provide that the interval for
the first installment payment
may be longer than the other
intervals; that the final in.
stallment payment may be less
than the preceding payment.
that where a buyers livelihood
is dependent on seasonal or in
termittent income, one or more
payments may be reduced or
omitted and that contracts
covering new cars to be used
by car salesmen as demonstra-
tors can be exempted from the
requirements that lnstallment
payments be in substantially
equal amounts.
These exceptions, it is ex-
planned, are to take care of
groups who expect money soon.
but do not have the full sum
OF the first payment at the
time they want to buy the
car. Specifically cited were
teachers paid on a nine-months
basis and farmers awaiting pay
for their crops.
The Commissioners are au-
thorized to write regulations
covering rebates on prepay
ments of the car debt. repos-
session insurance and anything
else they consider necessary to
protect car buyers.
The Commissioners are also
authorized to reqire bonds Of
dealers and finance companies
up to $25, 900.
Violations are punishable by
a fine of up to $500 or i'm
|prisonment of up to six months
or both.