There is, of course, always a possibility that the in stalment house customer may move to other parts be fore he has paid for the goods, or that he may other wise attempt to defraud the house. Under the terms that surround the instalment contract, however, this becomes a rather dangerous experiment, and few will risk it, even if they are not above resorting to such practices.
15. Points to be of the first points to be observed in handling credit transactions of this nature is that a substantial first payment be obtained.
This has a double purpose. In the first place, it goes far toward covering the cost of the goods, thereby reducing the amount involved in the risk that neces sarily must be assumed; in the second place, it offers greater assurance that subsequent payments will be made, on the principle that the buyer usually feels that he cannot afford, thru non-payment of the bal ance due, to forfeit the amount already paid on ac count.
Credit decisions in the instalment-house business must almost invariably be made at the first interview, for if decision is postponed, the sale is likely to be lost. "Usually, the customer will have inspected the goods and decided to buy them before he (or she) makes it known that credit is desired. When the credit man interviews the customer, he must en deavor to reach a conclusion as quickly as possible and without too much direct questioning. The cus tomer's financial condition and paying ability must be gauged by the nature of his employment, the size of his family, the street in which he lives and similar items—information that may usually be elicited in a brief conversation. Certain other information that may be necessary and that can be obtained only thru direct questioning, should be asked as tho it were merely a matter of form required by the established rules of the house.
Some of this information may subsequently be veri fied by investigation, and it is generally wise to oh taro such verification, but beyond checking up the address given, the place of employment and perhaps one or two other items, little outside information is obtained.
A comparison of the statements made during the interview will usually tell the experienced credit man whether the customer is giving a straight account of himself and of his income, and whether the purchases just made are warranted by the size of his income.
If, for example, the wife of a man whose wages are known to be sixty dollars a month, comes to the store and buys on instalment an oriental rug costing $200, the credit man knows at once that this is not a wise purchase, and he rightly concludes that the person who displays such poor judgment in buying for her household is not a safe credit customer.
One credit man who has charge of an extensive in stalment business in musical instruments, frequently procures corroborative information of a prospective customer's statements in the following manner: Suppose a new customer has given his occupation as that of foreman in a certain plant. The credit man, in order to check this statement, calls the plant on the 'phone and announces that he wishes to speak , to "Mr. Smith, your foreman." If the telephone op erator answers: "We have no foreman by that name," the credit man knows that there has been mis representation. If, on the other hand, the operator answers : "Just a minute!" or otherwise indicates that the person is really a foreman, the credit man quietly hangs up the receiver. lie has obtained the information he sought.
16. An element of danger.—Not many of those who come to the instalment house for credit intend to defraud the seller, tho a few undeniably do. The professional dead beat is just as likely to turn up at the instalment furniture store as at the corner gro cery, and is usually as difficult to "spot" in one place as in the other. It may be said, however, that the great majority of credit-seekers fully intend to pay their indebtedness, but laxity in the matter of regulat ing their expenditures, failure to take proper account of all their necessary expenses, and to make allow ance for idle days or weeks, frequently bring to naught their good intentions and render them unable to meet their promised instalment payments. This is the difficulty that always presents itself to the credit de partment of an instalment house, and that compels the credit man to exercise unceasing vigilance. From this point on, however, the matter is one of collection policy, which is a subject dealt with in another chap ter.