INSTALMENT SELLING

Taranaki Daily News, 29 April 1931, Page 9

INSTALMENT SELLING

POSITION IN AMERICA. LOSSES NOT GREAT. The instalment-selling plan has been adversely referred to by some critics in the United States, Australia and other countries, one of the main objections taken to it being that it would play havoc with general finance in times of depression. The New York correspondent of the Times in a recent issue says depression had been upon the country for almost a year and a half; in the greater part of which time 5,000,000, or perhaps 7,000,000, people have been unemployed, but instalment financing has not shown the least sign of collapse. Its strength and stability compare favourably with those of most other forms of business. Its losses, never more than a tiny fracJ -n of the whole trade, have increased only slightly. Many things said about the-' trade have been due to misconceptions as to its volume. At most it is 13 per cent, of the whole trade of the country and total annual instalment sales are not known, but are estimated at £1,200,000,000. Half of this sum represents first payments ou purchases with not over £450,000,000 outstanding at any one time, or about 5 to 5J 'per cent, of the total annual retail trade of the country.

About half of the instalment credit is handled by the sellers of the goods, and half by special finance companies, of which there are 1200, including 800 dealing primarily ■ with the motor-car trade. Some 75 per cent, of all sales of new and second-hand cars are made on the instalment plan. Furniture sales are about one-fourth as large as motorcar sales, other articles bought under the plan including almost anything that will last long enough to afford security for payments. Pride and quick substantial equity in the goods, purchased, the writer contends, induce buyers to maintain payments, and experience shows- that in hard times the public economises on instalment purchases about as much as it does on cash purchases.