Many In U.S. Go Into Debt To Buy Cars

Press, Volume C, Issue 29444, 21 February 1961, Page 10

Many In U.S. Go Into Debt To Buy Cars

(N.Z. Press Association— Copyright)

DETROIT, February 19. The car was here to stay because so many persons in the United States were willing to go into debt to bny one, said American Associated Press. This generally accepted view in the United States motor industry was reflected in Federal Reserve Board figures which showed Americans borrowed 135.000 million dollars in 1950-60 to buy new and used cars. Car loans represented the largest single instalment debt for most families, apart from the mortgage on the house. Over a lifetime a man could easily spend 30,000 dollars or more buying cars, even if he stuck to the so-called low price field and bought only once every three years. National averages showed at least two of every three new cars were sold on the instalment plan or hire purchase. The ratio was considerably higher on cars purchased by individuals since the averages included big fleet buyers wno paid cash. 90 Per Cent, on Time Payment The Ford division of the Ford Motor Company, Ltd., calculated 90 per cent, of its cars were sold in the United States on time payment.

Although so-called easy pkjmerit plans for cars had born in use a long time—as early as 1922—they had grown spectacularly in the last 10 year*.

In 1950 United States car buyers borrowed 8500 millioa dollars.

As the amount of credit extended grew\ so did th* length of the pnymdnt plans. Down payments wer* reduced as part of the pattern. Detroit bank cfrclet said th* average car loan now runs more than 30 months. Ford said of its credit tgiyers, 81 to 85 per cent commit themselves for 36 month*. One motor executive described the average ear ownei as always being in debt. The general pager ot Ford Division (Mr lit lacoccal in discussing instalment buying recently, suggested a method he said was one of the most economical ways to buy a car. provided tte customer was willing to stay in debt. His scheme: Buy on a threeyear contract and trade the car in after 27 months.

“You get a new car before you have to think of any major repairs, probably even before you need a set of tyres,” he said, “and you have enough equity in the car so you can probably continue to make the same payments.” ’