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BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM W /7^-i^X^U^— f r Consumer Credit Possible Expansion of Instalment Credit with Terms Liberalization Instalment credit outstanding can increase substantially as terms are liberalized. Here are several illustrations to indicate changes in total outstanding credit that might occur assuming certain modifications 1/ of terms. These illustrations assume that the volume of instalment sales is constant. For a starting point, assume that down payments average l/3 and repayment periods 15 months. If A) Down payment reduced to l/5, and repayment period held at 15 months -- there will be a 20 per cent increase in outstandings by the end of 15 months. B) Down payment held at l/3, repayment period lengthened to 2k months -- there will be a 56 per cent increase in outstandings by the end of 2k months. C) Down payment reduced to l/5, repayment period lengthened to 2k months — there will be a 100 per cent increase in outstandings by the end of 2^ months. l/ Taken from November I9U7 issue of Survey of Current Business. c