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In fact, searching questions are asked, and those customers who can get cars on credit are the ones whose' credit standing is good. They are people who have ability to pay. and who previously have demonstrated that they meet their obligations. The Chicago Tribune takes account of this in its rules of business. It will not accept Installment advertisement which indicates that anyone who walks into an automobile salesroom can get a car without a down payment, when in fact the offer applies only to those of good credit standing.
Nevertheless, a c o n s i derable amount of business is probably being done on terms which can cause later trouble. That is indicated by the instructions given to examiners of national banks by the comptroller of the currency— head of the national banking system.
He told his men to scrutinize the loan paper in the banks to see if they have been giving “too liberal auto financing terms." He added that. "We don’t think we should let loose practices slip by and become general." The federal reserve board in its July bulletin comments on the growing volume of loans by banks to finance consumer instalment credit. _
Our people are enjoying an ever rising standard of living, but are doing so by getting deeper into debt. Some people pay cash for their automobiles when they buy them and others, pay off the debts after a period, but on January 1 there was an average debt of $260 on each passenger car in use, old and new.
That made a total of 12 billioon dollars, and it has increased two billions since, or at the rate of four billion dollars a year. There is other consumer debt totaling 20 billion dollars and it, too, is increasing at the rate of another two billion dollars a year. In addition there is the 76 billion dollar debt on homes which has been increased from 18 billion in 1945. This is also instalment debt with payment based on the expectation, of steady employment and high wages.
Congress has not authorized the administration to impose controls over consumer credit, and if the administration asked for this power, which it t.has not done, we should oppose it. But we are shocked by some of the loose practices which are being employed to get people loaded with more debt than they can bear if times change.—Chicago Tribune.
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