BUYING ON THE INSTALMENT PLAN.
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The Deferred Payment System Offers Special Attractions to the Garage Proprietor Who Would Become a Lorry or Char-a-bancs Owner, but He Should be Cautious.
By "Vim."
AN OLD gAYING.runs " neithes. a‘borrower-nor a lender be,", and, though business would come to a. dead stop if the maxim were universally adopted, it is always well to bear it in mind as a broad princiPle by which to guide one's actions when in doubt.
Scores of garage proprietors know perfectly well that, if only they had the requisite capital to invest in motor lorries or chars-à-bancs, they could at once begin to earn profits with them, for they have the connections to guarantee employment for the vehicles they yearn to buy, and the repairing and other facili ties to run those vehicles economically. .
. Limited Power of Village Bank Branches.
Theoretically, banks exist to help just such cases as these, but, in practice, local bank managers in the smaller towns and villages have extremely limited powers when " speculative" projects need financing, their branches being regarded more or less as money feeders to headquarters, where the financial experts play their million-pound deals. Overdrafts are, of courSe, granted by local branches to garage proprietors, but, as a rule, only against collateral Security, which stipulation rather sticks in the throat of the ordinary man, who hates to feel that he has pledged his shirt, so to speak.
Hence, the offers that are now being made by some suppliers of new and secondhand vehicles to accept payments by instalments have a direct and special appeal ' to the motor trader who possesses an established business and desires to extend it by adding one or more lorries or chars-h.-bancs to his plant without appealing to his bankers. Sueh suppliers, in effect, lend the purchaser most of the sum he needs to carry out his ambition, and he repays them gradually over an agreed period, plus interest. Delivery is given when the first payment is put down, and thereafter each vehicle that has been bought should be earning enough money to pay the rest of the instalments. • All of which sounds very nice and easy, as it undoubtedly is, provided certain conditions are fulfilled, but it is just because the deferreZ payment scheme has such a pleasant sound that the need for ascertaining that the governing conditions of the case are suitable is so frequently forgotten..
Buying by periodical payments after delivery is the same thing as borrowing money,and that is always a serious matter, not lightly to be entered into. No man has a right to obtain a loan unless he is sure of .being able to repay it ; nor, if he is sensible, will he do so, for otherwise, he will " go a-sorrowing," because debts that cannot be met are uncomfortable bed-fellows. Let the garage proprietor who is considering whether he will take the plunge make quite sure that the conditions are favourable, or be may live to regret that he did not stick to his job of tending :to other folks' motors.
Deposit Money May be Required.
The first point for close investigation is whether the deposit of 25 per cent., or whatever it may be, can really be spared without crippling the existing garage -business. The temporary state of his bank balance.. is not a reliable indication of this, for it sometimes happens that cash receipts are unusually high in !comparison with payments—that is to say. that stocks are drawn on to an unusual degree—and if the apparent surplus is utilized for another purpose
the trader will inevitably find himself in a hole when he is forced to bring his stocks up to the mark. Unless the money which he has ix his bankers' hands is invariably more than ample, for his ordinary trading requirements a garage owner who contemplates a venture into the hiring business must give heed to the danger he would be running, by depleting his resources to the .extent of a •couple of hundred pounds. It is not 'a large sum, as money counts these days, but it sometimes makes all the difference between bringing both ends together and not doing it.
Assuming that the trader decides that' he can afford to lay down the deposit, will he manage successfully to meet all the-other payments as they become duel The palatial offices of insurance companies have mainly been built out of lapsed policies, which were taken out by optimistic people when they were flush, with never a thought for leaner times to come. Insurance premiums and instalments have a nasty way of cropping up with monotonous regularity, and they must be met. The intending purchaser has now to consider whether, optimism apart, he can rely on keeping his vehicle busy and earning money. Because there are haulage contractors in his neighbourhood who are obviously doing well, that is not positive evidence that he can, step in and take a share of the4,work. Possibly he will have to struggle long and hard to win anything like a paying proportion of the haulage trade of his locality—and, meanwhile, those .instalmeets will be coming round.
If he knows positively that he has aniong0his regular customers, a sufficient number of commercial concerns to assure him a solid beginning, or if he has received reliable promises of support from elsewhere, then he may laok upon the second condition as fulfilled. Should he. be thinking of buying a char-he banes, he must satisfy himself beyond any doubt that passengers will be his for the asking, and that his turnout will not be eating its head off during the winter.
A Docked Lorry is a Serious Liability.
The last point is that the chassis selected for purchase shall be dependable. I put it last, not because, it is less important than the foregoing, but because it is wider the control of the garage proprietor, and is, therefore, unlike the other two conditions, which are entirely beyond his power to influence. Of all people, a motor trader should be best able to select a chassis that will render him faithful service, so there is no call to labour this matter. A new vehicle is to be preferred, but one that has been honestly overhauled and bears a warranty will do. The _great thing to remember is that, whereas a lorry or char-h-bancs is an asset when in action, it becomes a liability the moment it goes off the road through a defect, and that the liability is serious. Granted that the prospective haulage contractor or char-à-basics owner feels confident that. he can spare the initial cash expenditure, find plenty of paying work for his purchase, and choose a reliable chassis, he need have no fear about buying by deferred payments.
Naturally, he must deal with a firm that has a Food repirtation for treating purchasers on the straight, And one that is not a money-lending concern under a thin .disguise. Fortunately, the right sort is fairly Plentiful.