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312 S-329 Reg. W-55 INTERPRETATION OF LAW OR REGULATION (Copies to be sent to all Federal Reserve Banks) TELEGRAM September 11, 1941 Young - Boston Sproul - New York Williams - Philadelphia Fleming - Cleveland Leach McLarin Young Davis - Richmond - Atlanta Chicago St. Louis Peyton - Minneapolis Leedy - Kansas CityGilbert - Dallas Day - San Francisco A question has be on received under Regulation W concerning a sum of $50 to $100, sometimes called a "pack", which a dealer may at times include in the price of an automobile as quoted to customers. When the automobile is sold, all or part of this sum may be eliminated from the price actually paid by the pixrchasar, either by an increase in trade-in allowance or by way of discount ou cash purchases. The question is whether, in determining the maximum credit that can be extended to the customer, such an extra sum of $50 to $100 may be included, either as part of the "bona fide cash purchase price" of the automobile and accessories or, in the case of a new automobile, as part of Item 1 or Item 4 of Part 3(a) of the Supplement. In determining what is the "bona fide cash purchase price" of a given automobile to be used in determining the maximum amount of credit under Part 3, padding of any kind—such as the "pack" referred to in the question if it is to bo eliminated from the price actually paid by the customer ty an increase in trade-in allowance or try some other device—must be excluded. In the specific case of a new automobile the maximum credit value can in no event exceed 66-2/3 per cent of the sum of Items 1 through U of Part 3(a) of the Supplement, and a $50 to $100 sum such as that described in the present question could not be included in any of these four items. Morrill •
@FedFRASER