HIRE PURCHASE.

Auckland Star, Volume LXIX, Issue 3, 5 January 1938, Page 11

HIRE PURCHASE.

POPULAR IN SYDNEY.

" HAS COME TO STAY."

STIGMA HAS NOW GONE.

(From Our Own Correspondent.)

SYDNEY, December 31

A few days ago the "Sydney Morning Herald" published an interesting statement dealing with the growth of the hire-purchase system in Sydney and New South Wales. According to the authorities quoted, this system, covering the purchase of goods of all descriptions, has now become practically universal, and it "has come to stay."

There can be little doubt that hirepurchase has gained ground here lately at the expense of the time-payment system. The managing director of a large furnishing establishment told the "Sydney Morning Herald" that, in his opinion, the growth of the system in recent years has been largely a result of the depression.

"Business firms," he said, "hare been obliged to contrive some methods of selling their goods to an impoverished people," and the result has been "a change from the old prohibitive system of a large deposit and short-term payment to small deposits and long periods for payment. "Equally Satisfactory." This no doubt accounts for the remarkable popularity that the hire purchase system has now attained here, and it must not be forgotten that the arrangements now made appear to be equally satisfactory to the seller and the purchaser.

The managing director quoted says that records over several years show that the defaulters amounted to less than 1 per cent of the purchases, and he adde that "this 1 per cent is not necessarily dishonest."

Further testimony to the value and efficacy of the hire-purchase system has been offered by officials of the sales branch of the County Council. The electrical department, which sells goods to the general public, has introduced the hire-purchase system during the past year, and its records indicate that the experiment has been "eminently successful." Astonishing Increase. The increase in business during the past eight months ( has been simply astonishing. Previous to the introduction of the nev system the council sold on the average 50 electric ranges a month. Since then sales have been 1925 for eight months—an average of 241 per month, and last month alone 381 were sold.

Hot water system sales have increased in the same proportion from four a month to 35 a month. The council finds that under this system the public buy the best quality of goods, and it now carries on 95 per oent of its sales business in this way.

| Evidence as to the satisfactory character of the hire-purchase system haa also been offered by the manager of the j "Industrial Acceptance Corporation," which finances motor car purchase on a large scale. This experienced business man points out that one of the most ■encouraging features of the system is the very small proportion of defaulters. In the transactions which he has supervised "the percentage of repossession is probably les-s than 1 per cent," and he has been struck by the very high level of honesty which has marked the business coming under his notice.

In such circumstances it is not surprising that the hire-purchase system has grown and flourished, though even some of its most ardent admirers may be surprised to learn that various estimates fix the value of the hire-purchase trade in Sydney during the year at from £15,000,000 to £20,000.000. These figures certainly seem to justify the conclusion reached by the "S.M. Herald" that "the old stigma attached to credit trading is gone, and that "it is now recognised as more sensible to buy goods bv hirepurchase than to disturb assets for a cash purchase."