SALES-AUTOMOBILE DEALER FINANCING AND THE BONA FIDE PURCHASER

Authors

Robert M. Barton S. Ed., University of Michigan Law SchoolFollow

Abstract

With the prospect of increased manufacture of automobiles for civilian use, the problem of financing the dealer and his customers will again loom large. In the past the burden has largely been assumed not by banks, whose credit practices and collection machinery are better adapted to short term, single payment credits, but by the finance or acceptance companies. These organizations mushroomed into prominence after World War I as retail installment selling became more and more prevalent, and with the "easy payment plan" offered by the dealer to the retail buyer, there was produced a corresponding need by the dealer himself to be financed. The stock in trade of the car dealer is relatively expensive and his usual working capital relatively small. The sales finance companies have been willing to extend credit for the dealer's wholesale purchases from the manufacturer and to buy up the retail purchaser's installment contract from him, assuming the risk of successful collection. In both wholesale and retail financing the company has a major interest in obtaining adequate security for the credit risk and shielding it from the claims of the dealer, his creditors, and his vendees. The relations of the company with the latter, the purchaser who buys from the dealer in the ordinary course of business, will be examined here.

Recommended Citation

Robert M. Barton S. Ed., SALES-AUTOMOBILE DEALER FINANCING AND THE BONA FIDE PURCHASER, 43 Mich. L. Rev. 605 (1944).
Available at: https://repository.law.umich.edu/mlr/vol43/iss3/9