Case For Control Of Hire-Purchase

Press, Volume CIII, Issue 30477, 26 June 1964, Page 3

Case For Control Of Hire-Purchase

(New Zealand Press Association)

WELLINGTON, June 25.

Hire-purchase payments were a form of savings, the Industries and Commerce Department told the Tariff and Development Board today.

In a 241-page report on economic and social implications, legislation, commercial practices, sources of funds for hire-purchase, the department said it recognised that repayment of credit represented savings. Reasons for the growth in hire-purchase trading were a two-year drop in the average age of those marrying in the last 10 years, increased home ownership and higher incomes.

Instalment credit probably increased impulse buying and tempted people to buy more

than they could afford. It was helped by advertising which did not set out clearly the total commitments and by persuasive sales techniques and lack of responsibility on the part of the purchaser. A side-effect was increased Government spending on roads to take the growing number of cars being bought on hire-purchase, and on electricity for electrical appliances. Outlining the case for control of hire-purchase trading, the report said it was generally accepted that it fluctuated with the trade cycle of any economy and amplified the peaks and troughs of the cycle. Control could reduce the trade fluctuations.

In the absence of price control on second-hand motor vehicles, terms controls could hold down prices because there would be less demand through fewer people being able to find the deposit and repay over a shorter period.