Fraternity-Testvériség, 1958 (36. évfolyam, 1-11. szám)
1958-01-01 / 1. szám
14 FRATERNITY PUBLIC URGED TO USE GREATER CARE WHEN BUYING ON INSTALLMENT PLANS “Indebtedness is the rule, not the exception, among American families today. Buying on the installment plan is now firmly established as a normal means of purchasing goods.” So says Nancy Pratt of the AFL-CIO Department of Research in a recent issue of the union’s magazine, AFL- CIO American Federationist. How many families are indebted? What are the dangers of buying on installment plans? How can those dangers be combatted? Miss Pratt says a study made last year by the Federal Reserve Board shows that 56 per cent of all Americans owe some kind of personal debt — not counting mortgage or business debts. The average amount owed is $450 a family. Most families having such debts earn yearly incomes between $2,000 and $7,500, she reports the survey as showing. More than 25 per cent of the families in the lower income brackets pay out as much as 20 per cent of their disposable income by purchasing various goods on installment plans. “There’s nothing wrong with installment buying”, Miss Pratt points out, “so long as the buyer knows what he is doing.” Unfortunately, she adds, many workers don’t know enough about such buying. So they lose much of their money through “excessive interest charges, repossession costs and various types of shady practices.” She says the dangers of being cheated are particularly great to automobile buyers, who have accounted for much of the increase in recent years in buying on credit. This is because automobile contracts are very complicated. One way in which automobile buyers are cheated, she says, is through extra high insurance charges — charges well above standard rates. She urges buyers to double check these charges as well as the total cost of the car, not just the monthly payments required to purchase it. People who buy on installment plans must also pay a service charge to cover the cost of purchasing on credit. And in many states there are no laws that protect buyers against unfair interest rates. So, says Miss Pratt, it’s important “to read the contract and find out what part of your monthly payments are going to reduce the principal on your loan and what is going for installment charges.” It’s important, too, she adds, to check what the small print in a contract says about repossession. “Suppose”, she points out, “a buyer has paid $2,500 on a $2,550 automobile. In most states, if the contract so stipulates, the car can be repossessed even if he defaults only on the last payment. He loses not only the car but also $2,500.” Buyers should also check on what happens if they repay their debts before final payments are due, says Miss Pratt. Some bad contracts
