Full text of Federal Reserve Bank of New York Circulars : 3586. Regulation W, Consumer Instalment Credit Control

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FED ERAL RE SE R V E BANK
OF NEW YORK
fC ircu la r N o. 3 5 8 6 1
L September 11, 19S0 J

R E G U L A T IO N W
CONSUMER IN STA LM E N T C R E D IT C O N TR O L

To all Persons in the Second Federal Reserve District
Concerned with Regulation W :

There is set forth below the text of a statement issued by the Board o f Governors o f the
Federal Reserve System, regarding the issuance by the Board of its Regulation W , entitled
“ Consumer Credit,” which will become effective on September 18, 1950.
F o r release in morning papers
o-f Saturday, September 9, 1950.

September 8, 1950

Under the authority o f the Defense P roduction A ct o f 1950, the B oard o f Governors today
reinstituted regulation o f consumer instalment credit through Regulation W effective at the opening
o f business September 18, 1950.
The regulation covers automobile instalment credits o f $5,000 and less and other instalment credits
o f $2,500 and less. E xcept that home improvement credits are now covered and terms are generally
tightened, the regulation is in much the same form as the regulation which expired June 30, 1949.
The limitations initially established a r e :
Down payments o f at least one-third, and maximum maturities o f 21 months for automobiles.
Down payments o f at least 15 per cent, and maximum maturities o f 18 months fo r appliances:
refrigerators, food freezers, radio or television sets, phonographs, cooking stoves, ranges, dish­
washers, ironers, washing machines, clothes driers, sewing machines, suction cleaners, air condi­
tioners and de-humidifiers.
Down payments o f at least 10 per cent, and 18 months maximum maturity fo r furniture
and rugs.
Down payments o f at least 10 per cent, and 30 months maximum maturity fo r home repairs,
alterations or improvements.
Follow ing the past policy o f placing fewer restrictions on small credits, the new regulation does
not contain down payment requirements fo r articles costing less than $100 although, unlike the form er
regulation, maturities are limited.
Instalment loans fo r the purchase o f any listed article carry the same limitations that apply to
the instalment sale o f the article; other instalment loans are limited to a maximum m aturity of
18 months.
In establishing the initial terms the Board took into account the prevailing practices and terms in
the trades affected. There has been a material relaxation o f instalment credit terms during the past
year or more, and the requirements o f the regulation are substantially tighter than the terms now
widely offered.
In the automobile field the great m ajority o f recent instalment sales o f new cars and late mode
used cars are reported as having been financed on substantially easier terms, either as to down p ay­
ments or maturities or both, than permitted b y the new regulation.




( over)

Similarly, m any instalment sales o f appliances and furniture are reported as having been made
with down payments o f 10 per cent or less; in m any cases only token or no down payments have been
required. Maturities o f 24 months on instalment sales o f such articles have been reported as widely
prevalent with longer maturities offered in some cases.
Consumer credit has undergone an unprecedented expansion, particularly in recent months.
Under present conditions continued excessive growth o f consumer instalment credit adds materially
to inflationary pressures.
The regulation o f consumer credit is one o f the fiscal, monetary and credit measures designed to
restrain the inflationary pressures that result in higher prices and to facilitate diversion o f critical
material and manpower to production o f defense needs as such diversion is required.
A s the B oard has frequently emphasized, the regulation is a useful supplementary instrument to
combat inflation. I t applies to an important part, but only to one part, o f the credit structure and
therefore cannot by itself effectively control inflationary forces.
The regulation is being published in the F ederal Register and copies o f the regulation will be
made available through all Federal Reserve Banks and Branches as soon as possible. The regulation
will be administered in the field by the 12 Federal Reserve Banks and their 24 Branches located con­
veniently throughout the country. Inquiries should be addressed to the nearest Federal Reserve Bank
or Branch.
Regulation W was first put into effect under Executive Order September 1, 1941. It expired
November 1, 1947. It was reinstated September 20, 1948 under statutory authority which expired
June 30, 1949. The business com munity and the buying public, the B oard and the Federal Reserve
Banks have thus had extensive experience with this type o f credit regulation.
Through the 12 Federal Reserve Banks and their 24 Branches, and the more than 250 directors
o f the Reserve Banks and Branches, the B oard has the advantage o f immediate and close contact with
all segments o f commerce, trade and industry, and with consumers affected by the regulation. Because
o f this advantage, a regulation o f this kind can be prom ptly adapted in the future, as it has in the
past, to changing conditions as reported on the basis o f experience in all parts o f the nation.

A copy o f the new Regulation W is enclosed so that you may acquaint yourself with its
provisions and determine whether or not your business is such that you will be subject to the
regulation.
Section 2( b) o f the regulation requires any person whose principal place of business is
within the Second Federal Reserve District, and who is engaged in any business making him
subject to the regulation, to file a registration statement with this Bank not later than sixty
days after September 18, 1950. This should be done whether or not the person had filed a
registration statement under Regulation W as in effect prior to June 30, 1949. The new reg­
istration forms will be mailed to you shortly.
Any inquiries you may have concerning Regulation W should be addressed to this Bank
at the Federal Reserve P. O. Station, New Y ork 45, N. Y.
Additional copies of this circular and o f the regulation will be furnished upon request.




A

llan

S proul,

President.

B O A R D OF G O V E R N O R S
o f the
F E D E R A L R E SE R V E SY STE M

CONSUMER CREDIT

R E G U L A T IO N W
E ffective S ep tem b er 18, 195 0




INQUIRIES REGARDING THIS REGULATION
Any inquiry relating to this regulation should he addressed
to the Federal Reserve Bank o r Federal
Reserve branch bank o f the district
in which the inquiry arises.




REGULATION W
C O N S U M E R C R E D IT
CONTENTS
Page
S e c . 1. S c o p e

S e c . 2. G e n e r a l

(а )
(б )
(a )
( b)
(c )
(a )
(b)
(c )
(d )
(e )

and

Sales: General

ent

Lo

ent

als,

S e c . 6. C e r t a in

(a )
(b )
(c )
(d )
(e)
(/)
(g )
(h )
0)
(;')
(k )
xem pt

(a )
(b)
(c )
(r/)
(e )
(/)
(g )
(h)
O')
(j)
(k)
S e c . 8. M

ents

R e g u l a t io n
R

e g is t r a t io n

3
3

R

u l e s ..............................................................

4

an s:

G eneral R

u l e s ...............................................................

5

Instalm ent loans to purchase listed articles
Unclassified instalm ent loans
Am ounts and intervals o f instalm ents; Record
Statement o f the borrower
Loans to make down paym ents prohibited

(«)
(b )
(<•)

E

R e q u ir e m

of

Down paym ent and m aturity
Am ounts and intervals o f instalm ents; Record
Tim e o f down payment

S e c. 4. I n s t a l m

S e c. 5. R e n e w

p p l ic a t io n

General requirem ents
Registration

S e c . 3. I n s t a l m

S e c. 7.

A

and

R

e v is io n s , a n d

T

(/)
(g )
(h )
O')
(j)

d d it io n s

6

e c h n ic a l

P r o v is io n s

.....................................................................

7

Paym ent schedules fo r seasonal incomes, etc.
Calculating date o f first instalm ent and maximum
m aturity
Record o f instalm ent sale
Credit fo r mixed purposes
Mail orders
D elivery in anticipation o f instalm ent sale
Sets and groups o f articles
E vasive side agreements
Side loan to make down payment
Purchase o f article in lieu o f trade-in
Misuse o f coupon plans
C r e d i t s ..................................................................................................................

11

Credits over $2,500 not involving automobiles
Business or agricultural loans
Credit to dealers and certain salesmen
Credit to governm ental agencies, religious institutions,
etc.
Credits under G overnm ent rehabilitation and readjust­
ment program s
Loans to pay fire and casualty insurance premiums
Credit fo r purchasing securities
Real estate credit
Loans to meet medical expenses, etc.
D isaster credits
Certain loans on savings shares or accounts

is c e l l a n e o u s

(a )
(b)
(c )
(rf)
(e )

A

General requirem ents
Statement o f changed conditions
Bona fide collection e ffo rt; Servicem an’s pre-induction
debt

P r o v is io n s ; D e f in it io n s

13

Preservation o f records; Inspections
Suspension o f license
E n forceability o f contracts
Clerical errors
N oncom pliance due to facts outside R egistran t’s knowl­
edge
Transactions outside United States
R igh t o f R egistrant to impose stricter requirements
Contracts outstanding on effective date o f regulation
Transactions subjected to regulation by amendment
Definitions

S upplem ent




18




(

REGULATION W

CONSUMER CREDIT
S E C T IO N 1.

SC O PE A N D A P P L IC A T IO N OF
R E G U L A T IO N

T h is reg u la tion is issued by the B oard o f G o v e rn o rs o f the
F ederal R eserve S ystem (h e r e in a fte r called the “ B o a r d ” ) , under
a u th o rity o f section 5 ( b ) o f the A ct o f O cto b e r 6, 1917, as
am ended, U .S.C ., title 50, A p p ., section 5 ( b ) ; E x e cu tiv e O rder
N o. 8843, dated A u g u st 9, 1941 (h e r e in a fte r called the “ E x e cu ­
tiv e O rd e r” ) ; and the “ D efen se P rod u ction A ct o f 1950,” p a r­
ticu la rly section 601 th ereof.
T h e reg u la tion applies, in gen eral, to any person w h o is en ­
g a g e d in the business o f ex ten d in g instalm en t cr e d it in am ounts
o f $5,000 o r less, o r d iscou n tin g, p u rch a sin g o r len d in g on, o b li­
g a tion s a risin g out o f such cred it. It a pplies w h eth er the person
is a bank, loan com pa n y, o r finance com p a n y , o r a person w h o
is so en ga ged in con n ection w ith an y oth er business, such as
by e x ten d in g such cr e d it as a dealer, retailer, o r oth e r person
in con n ection w ith the sellin g o f co n su m ers’ d u rab le goods.
S E C T IO N 2.

G E N E R A L R E Q U IR E M E N T S A N D
R E G IS T R A T I O N

(a )
G eneral R equ irem en ts.— E ach p erson en ga ged in the busi­
ness o f m a k in g in stalm en t sales ' o r in stalm en t loans,- o r en­
g a ged in the business o f lend in g on the s ecu rity o f o r d iscou n t­
in g o r p u rch a sin g ob lig a tion s a risin g ou t o f such cre d it, is re­
fe r r e d to in th is regu la tion as a “ R e g istr a n t” ; and no R e g istra n t
shall m ake o r receiv e any p aym en t w h ich con stitu tes o r arises
d ire ctly o r in d irectly ou t o f any such cr e d it exten ded b y him or
ou t o f a ny such ob lig a tion lent on o r d iscou n ted o r purch ased
by him , ex cep t on the fo llo w in g c o n d itio n s :
(1 )
H e m u st have a license, and each R e g istra n t is h ereby
gran ted such a license, bu t such license o f a R e g istra n t
m ay be su spended in the m a n ner and on the gro u n d s stated
in section 8 ( b ) ; and
' “ In sta lm e n t sale” is defined to include on ly in stalm e n t credit arising: out
o f the sale o f an article listed in the S u pp lem en t, h e re in a fte r called a “ listed
a r tic le .”
- Both “ in stalm en t sale ” and “ in stalm en t lo a n ” are defined to exclude
cred its in a principal am ou n t exceeding $ 5 ,0 0 0 . C ertain in stalm en t sales and
in stalm en t loans, including: som e th a t are in a prin cipal am ou n t exceeding
$‘2 ,5 0 0 , are exem pted fro m the regulation by section 7.




3

4

REGULATIO N

W

(2 ) T h e cr e d it exten ded, ren ew ed, revised o r con solid ated
by him , o r g iv in g rise to the ob lig a tio n d iscou n ted o r p u r­
chased by him o r a cq u ired by him as collateral, m ust com p ly
w ith the a p p lica b le req u irem en ts o f th is regu lation .
(b)
Registration. — W ith in 60 d a y s a fte r the e ffe ctiv e d ate o f
th is reg u la tion , o r 60 d ays a fte r he becom es s u b je c t to section
2 ( a ) , w h ich ev er is later, each R eg istra n t shall file, w ith the
F ed era l R eserve B ank o r any b ra n ch th e re o f in the d is trict in
w h ich the m ain office o f the R e g istra n t is located, a reg istra tion
statem en t on a fo r m ob ta in a b le fr o m a ny F ed era l R eserve B ank
o r b ra n ch . Such s ta tem e n t shall b e filed reg a rd less o f w h e th e r
o r n o t th e R eg is tra n t had filed such a s ta tem e n t u n d er R eg u la ­
tion W as in e ffe c t at a n y tim e p r io r to th e e ffe c tiv e d a te o f th is
reg u la tion .
S E C T IO N 3.

IN S T A L M E N T S A L E S : G E N E R A L R U L E S

E x c e p t as oth erw ise p rov id ed b y th is reg u la tion , each instal­
m en t sale shall co m p ly w ith the fo llo w in g requirem ents:"-

( a ) Down Payment ami Maturity.— T h ere shall be a d ow n p a y ­
m ent not less than that specified f o r the listed a rticle in the
S u pplem en t, such d ow n p aym ent to be calcu la ted as th erein
sp ecified ; and th e tim e b alan ce specified in section 6 ( c ) shall
have a m a tu rity n ot e x ce e d in g the m axim u m m a tu rity specified
fo r th e listed a rticle in the Supplem en t.
( b ) Amounts anti Intervals o f Instalments; R ecord.— E x c e p t
as p erm itted by section 6 ( a ) f o r seasonal incom es, etc., the tim e
b alan ce shall be p aya b le in in stalm en ts w h ich shall be ( 1 ) su b­
stan tially equal in am ou nt o r so a rra n g ed th a t n o instalm en t is
su bstan tia lly g re a te r than an y p re ce d in g in stalm en t, ( 2 ) p a y ­
able at a p p ro x im a te ly equal in terva ls n ot e x ce e d in g on e m on th ,
and (3 ) n ot less than $5 p er m onth o r $1.25 p e r w eek on the
a g g re g a te in sta lm en t ind eb tedn ess o f on e d e b to r to th e sam e
cr e d ito r .
T h e in fo rm a tio n specified in section 6 ( c ) shall be
set fo r th in a bon a fide re co rd o f a ny tra n sa ctio n s u b je c t to th is
section .
( c ) Tim e o f Down Payment.— T h e d ow n p aym en t shall be
ob tain ed at o r b e fo r e the tim e o f d eliv ery o f th e listed a r tic le ;
e x ce p t th a t in the case o f an a rticle listed in G rou p D, th e d ow n
C ertain in stalm e n t sa le s, in clu d in g som e th a t are in a p rin cipal am ount
exceedin g $ 2 ,5 0 0 , are exem pted fro m the regu lation by section 7.




REGULATION W

5

p aym en t shall be ob tain ed at o r b e fo r e the tim e o f b e g in n in g
th e agreed upon rep a irs, alteration s, o r im provem en ts.
S E C T IO N 4.

IN S T A L M E N T L O A N S : G E N E R A L R U LE S

E x c e p t as oth erw ise p rov id ed b y th is reg u la tion , each instal­
m ent loan shall co m p ly w ith the fo llo w in g re q u ir e m e n ts :4

( a) Instalment Loans to Purchase Listed Articles.— I f the R e g is ­
tra n t k n ow s o r has reason to k n ow th at the p roceed s o f an in sta l­
m ent loan a re to be used to p urch ase a ny listed a r tic le :
( 1 ) T h e p rin cip a l am ou nt lent (e x clu d in g an y in terest or
finance ch a rg es and the am ou nt o f any in su ra n ce p rem iu m )
shall n ot exceed th e m a xim u m loan valu e specified f o r the
a rticle in th e S u pplem en t, such loan valu e to be calculated
as th erein s p e cifie d ; and
( 2 ) T h e m a tu rity o f the in sta lm en t cr e d it (in clu d in g
any in terest o r finance ch a rg es, and the a m ou nt o f a ny in­
su ra n ce p rem iu m and o f any item s included in the cash
p rice o f the a rticle ) shall n ot exceed the m a xim u m m a tu rity
specified f o r the listed a rticle in the S upplem ent.

( b ) Unclassified Instalment Loans.— In the case o f an instal­
m ent loan w h ich is n ot s u b je c t to section 4 ( a ) , the m a tu rity
o f the instalm en t cre d it (in clu d in g any in terest o r finance
ch a rg es and the a m ou nt o f any in su ra n ce p re m iu m ) shall n ot
exceed the m a xim u m m a tu rity specified f o r unclassified instal­
m ent loan s in the Supplem ent.
( c ) Amounts and Intervals o f Instalments; R ecord. — W h eth er
s u b je c t to section 4 ( « ) o r section 4 ( b ) , th e instalm en t cred it,
e x ce p t as p erm itted by section 6 ( a ) f o r seasonal incom es, etc.,
shall be payable in instalm en ts w h ich shall be ( 1 ) su bstan tially
equal in am ou nt o r so a rra n g ed th a t n o instalm en t is su bstan ­
tia lly g re a te r in a m ou n t than a ny p reced in g instalm en t, (2 )
p aya b le at a p p ro x im a te ly equal in terva ls n ot e x ce e d in g one
m on th , and ( 3 ) n ot less than $5 p er m on th o r $1.25 p er w eek on
the a g g r e g a te instalm en t in debtedness o f on e d e b to r to the sam e
cre d ito r . T h e term s o f p aym en t shall be set fo rth in a bona
fide re co rd o f an y instalm en t cre d it s u b je c t to th is section .
( d ) Statement o f the B orrow er. — N o R eg istra n t shall m ake
an y instalm en t loan s u b je c t to section 4 ( a ) o r 4 (ft) unless he
*
C ertain in stalm e n t loans, in clu d in g som e th a t are in a principal am ount
exceedin g $ 2 ,5 0 0 , are exem pted fro m the regu lation by section 7.




6

REGULATION

W

shall have accep ted in g ood fa ith a sign ed S ta tem e n t o f the
B o r r o w e r as to th e p u rp oses o f the loan. Such S tatem en t shall
state w h eth er o r not an y o f the p roceed s o f the loan a re to be
used to m ake a d ow n paym ent on the p u rch a se o f a listed a rticle
o r to be used to p u rch a se a ny listed a rticle, and if an y o f the
p roceed s o f th e loan a re to be used f o r the latter p u rp ose such
S ta tem en t shall id e n tify such listed a rticle and shall state the
cash p rice '• th e r e o f and th e valu e o f a ny tra d e -in . I f a R e g is ­
tra n t relies in g ood fa ith on the fa c ts set out b y th e o b lig o r
in such Statem ent, it shall be deem ed to be co r re c t f o r th e p u r­
p oses o f the R eg istra n t.

(e )
Loans to Make Down Payments Prohibited.— A R e g istra n t
shall n ot m ake a n y instalm en t loan i f he k n ow s o r has reason to
k n o w th a t a n y p a rt o f the p roceed s th e r e o f is to be used to m ake
a d ow n p a ym en t in con n ection w ith the p u rch a se o f a n y listed
a rticle.
S E C T IO N 5.

R E N E W A L S , R E V IS IO N S , A N D
A D D IT IO N S

(a )
General Requirem ents.— In the case o f an instalm en t sale
o r instalm en t loan w h ich results fr o m a ren ew al o r re v isio n o f
a n y instalm en t c r e d it a lrea d y ou tstan d in g , o r w h ich results
f r o m the com b in a tion o f an y such o u tsta n d in g cr e d it w ith an
a d d ition a l instalm en t cred it, the ren ew ed, revised , o r co n s o li­
dated ob lig a tio n shall (re g a rd le ss o f w hen th e o u tsta n d in g cre d it
o r ig in a te d ) co m p ly w ith all the req u irem en ts o f th is reg u la tion
as i f it w ere a n ew cre d it e x ce p t t h a t :
( 1 ) T h e req u irem en ts as to S ta tem en t o f the B o r r o w e r
and d ow n p aym en t o r m a xim u m loan value, if any, shall
n ot a p p ly to the ou tsta n d in g cr e d it a lrea d y held b y the
R e g is tr a n t; and
( 2 ) T h e ren ew ed, revised , o r con solid a ted o b lig a tio n m ay,
in so f a r as the m a tu rity and instalm en t req u irem en ts a re
con cern ed , be treated as i f it w ere a n ew cr e d it w ith th e
m a xim u m m a tu rity calcu lated fr o m the date o f the ren ew al,
rev ision , o r con solid a tion . T h e p aym en ts on such ren ew ed,
revised , o r con solid a ted ob lig a tio n shall n ot be less than $5
p er m onth o r $1.25 p er w eek on the a g g re g a te instalm en t
ind eb tedn ess o f on e d eb tor to th e sam e cre d ito r.
P a r t 5 o f the S u p p lem en t p erm its the use o f a
p rice in certain cases.




bona fide estim ated cash

REGULATION W

7

( b ) Statement o f Changed Conditions. — N otw ith sta n d in g any
o th e r p rov ision o f th is reg u la tion , i f a R eg istra n t a ccep ts in
g o o d fa ith a S ta tem en t o f C h an ged C on d ition s as p ro v id e d in
the fo llo w in g p a ra g ra p h , an in sta lm en t cr e d it that refinan ces
a n y ou tsta n d in g ob lig a tio n (w h e th e r o r n ot such ob lig a tio n is
held b y the R e g istra n t o r is itself p aya b le in in sta lm en ts) m ay
h ave a m a tu rity n ot e x ce e d in g th e m a xim u m m a tu rity specified
in the S u pplem en t f o r refin a n cin g p u rsu an t to such S tatem en ts,
but such m axim u m m a tu rity shall be a p p lica b le on ly to the cre d it
refinanced. T h e p aym en ts on the cr e d it refinan ced need n ot be
as la rge as $5 p er m onth o r $1.25 p er w-eek.
T h e req u irem en ts o f a S ta tem e n t o f C h an ged C on d ition s will
be com plied w ith on ly i f th e R e g istra n t a ccep ts in g o o d fa ith a
w ritten statem en t sig n ed by the o b lig o r that th e con tem plated
refin a n cin g is n ecessary in o rd e r to a v oid undue h a rd sh ip upon
the o b lig o r o r his d epen den ts resu ltin g fr o m co n tin g e n cie s that
w e re u n foreseen b y h im at the tim e o f o b ta in in g the o rigin a l
cre d it o r w h ich w ere b eyon d h is co n tro l, w h ich statem en t also
sets fo rth b riefly the p rin cip a l fa c ts and circu m sta n ces (1 ) w ith
resp ect to the orig in a l cr e d it and ( 2 ) w ith resp ect to such co n ­
tin gen cies, and sp ecifically states in a d d ition th a t the co n te m ­
plated refin a n cin g is n ot p ursu an t to a p recon ce iv e d plan o r an
in tention to eva de o r circu m v e n t the req u irem en ts o f th is re g u ­
lation.

( c ) Bona Fide Collection E ffort; Serviceman's Pre-induction
Deht.— N oth in g in th is regu la tion shall be con stru ed to p reven t
a n y R eg istra n t fr o m m a k in g a ny ren ew al o r re v isio n , o r ta k in g
an y action that he shall deem n ecessa ry in g o o d fa ith ( 1 ) f o r
the R e g istr a n t’s ow n p rotection in con n ectio n w ith an y o b li­
g a tion w h ich is in d efa u lt and is the s u b je c t o f bona fide collec­
tion e ffo r t b y the R eg istra n t, o r (2 ) w ith re sp e ct to an y o b li­
g a tion o f a ny m em b er o r fo r m e r m em b er o f th e arm ed fo rc e s
o f th e U nited S tates in cu rred p r io r to h is in d u ction in to such
se rv ice and a ssig n m en t to a ctiv e d u t y :
P ro v id e d , th a t the
in stalm ent sale o f a ny repossessed a rticle m ust com p ly w ith the
a p p lica b le req u irem en ts o f th is reg u la tion .
S E C T IO N 6.

C E R T A I N T E C H N I C A L P R O V IS IO N S

(a )
Payment Schedules fo r Seasonal Incom es, etc.— T h e sch ed ­
ule o f instalm en t p aym en ts oth erw ise specified b y th is regu lation
m a y be m odified, w ith in the a p p lica b le m a xim u m m a tu rity, as
f o ll o w s :




R EG U LATION W

8

( 1 ) I f th e in com e receiv ed b y th e o b lig o r fr o m the m ain
sou rces o f his in com e cu stom a rily fluctuates m a teria lly fr o m
m on th to m onth o r fr o m season to season and th e R e g is ­
tra n t has a re c o rd o f the fa c ts relied upon b y h im in g o o d
fa ith in th a t con n ection , such sch edule m a y be adapted to
such cu s to m a ry flow o f in com e p rov id e d ( i ) at least h a lf
o f the cre d it is to be rep a id w ith in the first h a lf o f th e a p p li­
ca b le m a xim u m m a tu rity o r at least tw o -th ird s o f the cred it
is to be rep aid w ith in the first tw o -th ird s o f th e a pp lica ble
m a xim u m m a tu rity, o r ( i i ) p aym en ts a re red u ced o r om itted
in n ot m ore than 4 m on th s o f a n y ca le n d a r y e a r bu t are
oth erw ise in equal m on th ly a m o u n ts; o r
(2 ) T h e R e g istra n t m a y req u ire term s o f p a ym en t w h ich
( i ) p rov id e a final o r oth er instalm en t p a ym en t w h ich , as
a resu lt o f rou n d in g o ff p re ce d in g in stalm en ts b y a m ou nts
less than $1, is n ot m ore than 50 p er cen t g r e a te r in am ou nt
th an the a m ount o f a n y p re ce d in g instalm en t, o r ( i i ) p ro v id e
d u r in g the first 4 m on th s o f the m a tu rity o f th e ob liga tion
add ition al in sta lm en t p aym ents w h ich a re in su bstan tially
equal a m ou n ts and at a p p ro x im a te ly equal in terva ls if, as a
resu lt, no in sta lm en t is m ore th an tw ice as la rg e as any
p re c e d in g instalm ent.

( b ) Calculating Date o f First Instalment and Maximum Matu­
rity.— In ca lcu la tin g the m a xim u m m a tu rity o f an instalm en t
o b lig a tio n , a R e g istra n t m ay, at h is op tion , use a n y d ate n ot m ore
th an 15 days su bsequent to the actual date o f the loan o r d e liv e ry
o f the listed a rticle s o ld ; and e x ce p t as p erm itted b y se ctio n 6 ( a ) ,
the first instalm en t shall be sch eduled f o r p aym en t n ot later than
on e m on th or, in a cco rd a n ce w ith such o p tio n , one m onth and 15
d ays su bsequ en t to th e actu al date o f the loan o r d e liv e ry o f the
listed a rticle sold.
( c ) R ecord o f Instalment Sale.— T h e re co rd o f an instalm en t
cr e d it a risin g fr o m the sale o f a listed a rticle and req u ired by
se ction 3 ( b ) shall set fo r t h (in an y o r d e r ) th e fo llo w in g
in fo r m a t io n :
( 1 ) A b r ie f d escrip tion id e n tify in g the a rticle p u r c h a s e d ;
( 2 ) T h e cash p rice o f the a r tic le ;
( 3 ) T h e am ou nt o f the p u rch a ser’s d ow n p a ym en t ( i ) in
cash and ( i i ) in g ood s a ccep ted in trad e, to g e th e r w ith a
b r ie f d escrip tion id e n tify in g su ch g o o d s and s ta tin g th e
m on eta ry va lu e a ssign ed th ereto in g o o d f a it h ;




REGU LATIO N W

9

( 4 ) T h e am ou nt o f a ny in su ra n ce p rem iu m f o r w h ich
cre d it is exten d ed and o f an y finance ch a rg e s o r in terest
b y w a y o f d iscou n t inclu d ed in th e p rin cip a l am ou nt o f the
ob lig a tion , o r the sum o f th ese a m o u n ts ;
(5 ) T h e tim e b a la n ce ow ed by th e p u rch a ser, w h ich is the
sum o f item s ( 2 ) and ( 4 ) m in us item (3 ) ; and
( 6 ) T h e term s o f paym ent.
T h e record need n ot inclu d e a d escrip tion o f the a rticle if it is
p u rch a sed by m eans o f a cou p on b ook o r sim ila r m ediu m o f in sta l­
m en t cr e d it upon w h ich th ere has been m ade a cash d ow n p a y ­
m en t at least as g r e a t as the h ig h est d ow n p a ym en t req u ired by
th is reg u la tion on a n y a rticle sold by th e R eg istra n t. T h e re co rd
need n ot inclu d e the in fo rm a tio n called f o r b y item s ( 2 ) and
( 4 ) i f the R e g istr a n t is one w h o, w ith resp ect to th e article,
cu s to m a rily quotes to th e p u b lic a tim e p r ic e on ly w h ich includes
th e finance o r oth er ch a rg es i f any, p ro v id e d he sets fo r th such
tim e p rice in such re co rd , and p rov id ed he ob ta in s a cash d ow n
p aym en t w h ich is at least as la rg e as w ou ld be req u ired if the
p e rce n ta g e specified f o r th e a rticle in th e S u p plem en t w ere
a p p lica b le to th e tim e p rice.

( d ) Credit fo r Mixed Purposes. — In case a cr e d it is p a rtly su b­
je c t to one section o f this reg u la tion and p a rtly s u b je c t to another
section , th e a m ou nt and term s o f such cr e d it shall be such as
w ou ld resu lt i f th e cr e d it w ere d ivid ed in to tw o o r m o re parts
and each p a rt w ere trea ted as i f it stood a lo n e ; e x ce p t th a t the
m a tu rity o f a ny such cr e d it m a y be th e m a xim u m m a tu rity
a p p lica b le to the listed a rticle g iv in g rise to the m a jo r p a rt o f
the cred it. In case a c r e d it is p a rtly s u b je c t to th is regu lation
(w h e th e r f o r a listed a rticle o r b eca u se o th e rw ise req u ired to
be scheduled f o r p aym en t w ith in a ny m a xim u m m a tu rity sp e­
cified by th e re g u la tio n ) and p a rtly n ot s u b je c t to the reg u la tion ,
the am ou nt and term s o f such cr e d it w ill co m p ly w ith the req u ire­
m en ts o f th is reg u la tion i f th ey s a tis fy th e req u irem en ts o f this
reg u la tion a p p lica b le to the regu la ted p ortion .
( e ) Mail Orders. — A n instalm en t sale shall n ot be deem ed to
be in viola tion o f the d ow n p a ym en t req u irem en t o f section 3 ( a )
i f the sale is m ade upon the receip t o f a m ail o rd e r f o r one o r
m o re a rticles and the cash d ep osit receiv ed w ith the o rd e r fa ils
b y no m ore th an $1 to equal the sum o f th e d ow n p aym en ts
req u ired b y th is reg u la tion f o r all o f the a rticle s included in the
ord er.



10

REGULATION W

( f ) Delivery in Anticipation o f Instalment Sale.— E x c e p t as
p rovid ed in the fo llo w in g p a ra g ra p h , in case an y listed a rticle is
d eliv ered in a n ticip a tion o f, o r un der an y a rra n g em en t w h ereb y
d e liv e ry o f a listed a rticle p recedes, an in stalm en t sale o f th a t
a rticle o r a sim ila r a rticle (su ch as, bu t n ot lim ited to, a d elivery
“ on a p p ro v a l,” “ on tr ia l,” o r as a “ d em o n stra to r” ) , the R e g ­
istra n t shall requ ire, at o r b e fo r e the tim e o f such d e liv e ry , a
d ep osit equal to the d ow n p aym ent that w ou ld be req u ired on
such an in stalm en t sale.
In o rd e r to q u a lify as an excep tion to the p re ce d in g p a ra g ra p h ,
the a rticle m ust be an a rticle listed in G rou p B o r in G rou p C,
the d eliv ery m u st be ex clu siv ely f o r the p u rp ose o f a bona fide
tria l, a p p rov a l, o r d em on stration , and the R e g istra n t m u st, w ith in
10 d ays a fte r such d eliv ery , ob tain the d ow n p aym en t re fe rre d
to in the p re ce d in g p a ra g ra p h o r the retu rn o f the article. E v e ry
such case shall be eviden ced b y a w ritten a greem en t sig n ed by
the resp ectiv e p arties, o f w h ich a co p y shall be g iv e n the p ro s p e c­
tiv e p u rch a ser at the tim e o f o r b e fo r e the d e liv e ry o f the article,
and such w ritten a greem en t shall state cle a rly and p rom in en tly
th a t ( 1 ) the d e liv e ry is ex clu siv ely f o r the p u rp ose o f a bon a fide
tria l, a p p rov a l, o r d em on stra tion , and ( 2 ) th e p ro sp e ctiv e p u r­
ch a ser w ill m ake the req u ired d ow n p aym en t (th e am ou nt o f
w h ich shall be stated in th e a g re e m e n t) w ith in 10 d ays a fte r
d e liv e ry o f the a rticle f o r tria l, a p p rov a l, o r d e m on stra tion o r
w ill return o r release the a rticle w ith in such 10-day period.
( g ) Sets and G roups o f Articles. — In d ete rm in in g w h eth er the
d o w n p a ym en t and m a xim u m loan value req u irem en ts o f this
reg u la tion are ap p lica ble, a ny set, g rou p , o r a ssem bly com m on ly
con sid ered , sold o r used as a sin gle u n it shall be deem ed to be a
sin gle listed a rticle i f the com p on en t p arts th e re o f a re sold o r
d eliv ered at su bstan tia lly the sam e tim e.
( h ) Evasive Side Agreements.— N o cr e d it com p lies w ith th e
req u irem en ts o f th is reg u la tion i f at th e tim e th e ob lig a tio n
a rises th ere is a ny a greem en t, a rra n g em en t, o r u n d ersta n d in g
( 1 ) by w h ich the ob lig a tion is to be ren ew ed o r rev ised on
term s w h ich w ou ld p erm it final p aym en t to be d e fe rre d b eyon d
th e d ate p erm itted b y th is reg u la tion f o r such cr e d it at its in ce p ­
tion , o r ( 2 ) b y w h ich the o b lig o r is to be enabled to m ake re p a y ­
m en t on co n d itio n s in con sisten t in a n y oth e r re sp e ct w ith th ose
req u ired b y th is reg u la tion , o r (3 ) b y w h ich th ere is to be a ny




REGU LATIO N W

11

eva sion o r circu m v en tion , o r a ny concealment^ o f an y eva sion o r
circu m v en tion , o f a ny req u irem en t o f th is regu lation .
(i)
Side Loan to Make Down Payment.— A R e g istra n t shall
n ot exten d a ny cr e d it f o r fin a n cin g the p u rch a se o f a n y listed
a rticle i f he k n ow s o r has reason to k n ow that th ere is, o r th a t
th ere is to be, a ny oth er cr e d it o f a ny kind exten ded in co n n e c­
tion w ith the p u rch a se o f the listed a rticle w h ich w ou ld b r in g
the tota l a m ou n t o f cr e d it exten d ed in co n n e ctio n w ith such
p u rch a se b eyon d th e a m ou nt o f instalm en t cre d it p erm itted
by th is r e g u la tio n ; but, i f the R e g istra n t a ccep ts in g o o d fa ith
a w ritten statem en t sign ed b y the o b lig o r that no such oth er
cr e d it exists o r is to be extended, such statem en t shall be
deem ed to be co r re c t f o r the p u rp oses o f the R egistra n t.
( j ) Purchase o f Article in Lieu o f Trade-in.— A n y th in g w h ich
the seller o f a listed a rticle buys, o r a rra n g e s to h ave bough t,
fr o m the p u rch a ser at o r a bou t the tim e o f the p u rch a se o f
the listed a rticle shall be reg a rd ed as a tra d e -in f o r the
p u rp oses o f th is regu lation .
( k ) Misuse o f C oupon Plans.— N o cou p on , tick et, o r sim ila r
m ediu m o f cred it, w h eth er paid f o r in instalm en ts o r oth erw ise,
shall be a ccep ted b y a ny R eg istra n t in paym en t, in w h ole or
in p art, f o r a n y listed a rticle if such a ccep ta n ce, in effect, w ould
p e rm it the a rticle to be sold on term s n ot co m p ly in g w ith th e
req u irem en ts o f th is regu lation .
S E C T IO N 7.

E X E M P T C R E D IT S

T h e p ro v is io n s o f th is reg u la tion , oth er than section 8 ( a ) ,
d o n ot a pp ly to a n y o f the fo llo w in g :

( a ) Credits over $2,50 0 Not Involving Autom obiles. — A n y
c r e d it in a p rin cip a l a m ou n t e x ce e d in g $2,500, unless it is (1 )
an insta lm en t sale o f an a rticle listed in G rou p A , o r ( 2 ) an
in sta lm en t loan th e p roceed s o f w h ich a re to be used to p u rch a se
an a rticle listed in G rou p A .
( b ) Business or Agricultural Loans.— A n y loan f o r business
p u rp oses to a b u siness en terp rise o r f o r a g ricu ltu ra l p u rp oses
to a p erson en ga ged in a gricu ltu re, p ro v id e d th e loan is not f o r
th e p u rp ose o f p u rch a sin g a listed article.
( c ) Credit to Dealers and Certain Salesmen.— A n y cr e d it e x ­
ten d ed to a w h olesa ler o r reta iler to finance the p u rch a se o f




12

REGULATIO N W

a n y a rticle f o r resale, o r a n y cr e d it exten d ed to a bona fide
salesm an o f a u tom obiles in o rd e r to finance the p u rch a se o f a
n ew a u tom ob ile to be used b y h im p rin cip a lly as a d em on stra tor.

( d ) Credit to Governm ental Agencies, Religious Institutions, etc.
— A n y cr e d it exten d ed to the F ed era l G overn m en t, a ny S tate
g o v e rn m e n t, any p olitica l su bd iv ision , o r a n y d ep a rtm en t, a gen cy,
o r establish m en t th e re o f, o r to a n y ch u rch , h ospital, clin ic,
san itariu m , sch ool, college, o r oth er religiou s, ed u cation a l,
ch a rita b le, o r eleem osy n ary in stitu tion .

( e ) Credits Under Governm ent Rehabilitation and Readjust­
ment Program s. — A n y c r e d it ( 1 ) exten d ed b y the L a n d B an k
C o m m ission er on b e h a lf o f the F ed era l F a rm M o r tg a g e C o r­
p o ra tion o r b y a ny F ed era l land ban k and fo u n d , p u rsu a n t to
re g u la tion s issued b y the C om m ission er, to be n ecessa ry to
m a in ta in o r in crea se p rod u ction o f essen tial a g ricu ltu ra l c o m ­
m od ities, ( 2 ) exten d ed o r insu red b y the F a rm e rs ’ H om e A d ­
m in istra tion , ( 3 ) exten d ed in a ccord a n ce w ith the re g u la tio n s
o f the S ecreta ry o f the In te r io r f o r the e co n o m ic develop m en t
o r reh a b ilita tion o f In d ia n s, (4 ) exten d ed u n der section 4 ( a ) ( 4)
o f the R econ stru ctio n F in a n ce C o rp o ra tio n A ct, as am ended,
b eca use o f floods o r oth er ca ta strop h es, o r (5 ) exten d ed , g u a ra n ­
teed, o r insu red in w h ole o r in p a rt by th e A d m in is tr a to r o f
V e te ra n s ’ A ffa ir s p u rsu a n t to the p ro v is io n s o f T itle I II o f
the S erv ice m e n ’s R ea d ju stm en t A c t o f 1944, as am ended, o r
b y a n y S tate a g e n cy p u rsu a n t to sim ila r S tate legislation .
( f ) Loans to Pay Fire and Casualty Insurance Prem ium s. — A n y
loan to finance a p rem iu m in ex cess o f one y e a r on a fire o r
ca su a lty in su ra n ce p o licy i f th e loan is fu lly secu red b y the
u n earn ed p o rtio n o f su ch p rem iu m and the p o licy is n ot related
to a n y listed a rticle sold to the b o rro w e r, o r financed f o r him ,
b y the R eg istra n t.

( g ) Credit fo r Purchasing Securities.— A n y cre d it w h ich is
su b jected to the B o a r d ’s reg u la tion s issued un der the S ecu rities
E x c h a n g e A c t o f 1934, as am ended, o r w h ich is o th e rw ise f o r
the p u rp ose o f p u rch a sin g o r c a r r y in g stock s, bonds, o r oth er
in v estm en t secu rities.
( h ) Real Estate Credit. — A n y cr e d it exten d ed f o r th e p u rp ose
o f fin a n cin g o r refin a n cin g ( 1 ) th e con stru ctio n o r p u rch a se o f
an e n tire resid en tia l b u ild in g o r oth er en tire stru ctu re , (2 )
the con stru ction o r p u rch a se o f a ny oth er en tire u n it design ed



REGULATION

W

13

f o r residen tial occu p a n cy i f such u n it does n ot resu lt fro m
re p a irs, a ltera tion s, o r im p rovem en ts upon an e x is tin g stru ctu re,
o r ( 3 ) an y c r e d it su b jected to reg u la tion s issued un der the
D e fe n se P ro d u ctio n A c t o f 1950 c o n c e rn in g real estate co n ­
stru ctio n cred it.

(i)
Loans to Meet Medical Expenses, etc.— A n y loan as to w h ich
th e R e g istra n t a ccep ts in g ood fa ith a w ritte n statem en t signed
by the b o r r o w e r c e r tify in g th a t the p roceed s are to be used f o r
bon a fide ed u cation a l, m edical, h ospital, dental, o r fu n era l e x ­
penses, o r to p a y d ebts in cu rred f o r such expen ses, and that such
p roceed s (unless they are to be used ex clu siv ely f o r education al
exp en ses) a re to be p aid o v e r in a m ounts specified in such state­
m en t to p erson s w h ose nam es, addresses, and occu p a tio n s are
stated therein .
( j ) Disaster Credits.— A n y cr e d it exten d ed to finance th e re­
p a ir o r rep lacem en t o f p ro p e rty d am a ged o r lost as a result o f a
flood o r oth er sim ila r d isa ster w h ich the F ed era l R eserve B ank
o f the d is trict in w h ich the d isa ster occu rre d finds has created
an e m erg en cy a ffe ctin g a su bstan tial n u m ber o f the inh abitants
o f the strick en area, p rov id ed such cr e d it is exten d ed p rio r to
the end o f the six th ca len d a r m onth fo llo w in g the m on th in w h ich
the d isa ster o ccu rre d and the R e g istra n t has a re c o rd o f the
fa c ts relied upon by h im in g ood fa ith d e sc rib in g th e dam age
o r loss.
( k ) Certain Loans on Savings Shares or Accounts.— A n y loan
w h ich is m ade b y a bank, sa v in gs and loan a ssocia tion , o r sim ilar
in stitu tion , and is fu lly secu red b y w ith d ra w a b le sh ares issued
by o r sa v in g s a ccou n ts held w ith the lender.
S E C T IO N 8.

M IS C E L L A N E O U S P R O V IS I O N S ;
D E F I N IT IO N S

(a )
Preservation o f R ecords; Inspections.— E v e r y R e g istra n t
shall p reserv e, f o r the life o f the ob lig a tion to w h ich th ey relate,
such b ook s o f accou n t, record s, and oth er p ap ers (in clu d in g any
statem en ts o r a greem en ts req u ired b y o r obtain ed p u rsu a n t to
th is re g u la tio n ) as are releva n t to esta b lish in g w h eth er or
n o t a cr e d it qualifies f o r exem p tion u n der section 7, o r w h eth er
o r n ot it is o th erw ise in co n fo r m ity w ith the req u irem en ts o f
th is reg u la tion , p rov id ed , h ow ev er, th a t the R e g istra n t m a y
p re serv e p h o to g ra p h ic rep ro d u ctio n s in lieu o f such b ook s o f
a ccou n t, record s, o r oth er papers.




14

R EG U LATIO N W

F o r the p u rp ose o f d e te rm in in g w h eth e r o r n ot th e re has
been com p lia n ce w ith th e req u irem en ts o f th is reg u la tion , e v e ry
R e g istra n t shall p e rm it th e B oa rd o r an y F ed era l R eserve
B an k b y its duly au th orized rep resen ta tiv es, to m ake such
in sp ection s o f his b u siness op era tion s as the B o a rd o r F ed era l
R e serv e B an k m a y deem n ecessa ry o r a p p ro p ria te , in clu d in g
in sp ection s o f b ook s o f a ccou n t, con tra cts, letters, o r oth er
releva n t p ap ers w h e re v e r located, and, f o r such p u rp ose, shall
fu rn is h such re p o rts as th e B oa rd o r th e F ed era l R e se rv e B ank
m ay requ ire. W h en ord e re d to d o so b y the B oard , ev e ry
R e g istr a n t shall fu rn is h , u n der oath o r o th e rw ise , such in ­
fo r m a tio n rela tiv e to an y tra n sa ction w ith in th e sco p e o f the
a u th o rity cited in section 1 as the B oa rd m a y deem n ecessa ry
o r a p p ro p ria te f o r su ch p u rp ose, in clu d in g the p ro d u ctio n o f
b o o k s o f accou n t, con tra cts , letters, o r o th e r p ap ers in th e cu sto d y
o r co n tro l o f such p erson .
( b ) Suspension o f L icen se'1.— T h e license o f a ny R e g istra n t
m a y, a fte r rea son ab le n otice and op p o rtu n ity f o r h earin g, be
su spen ded b y the B oard , in its en tire ty o r as to p a rticu la r a ctiv i­
ties o r p a rticu la r offices o r f o r specified p erio d s, because o f a ny
w illfu l o r n eg lig en t fa ilu r e to co m p ly w ith a n y p ro v isio n o f th is
re g u la tion o r any req u irem en t o f th e B oa rd p u rsu a n t th ereto.
A licen se w h ich is su spen ded f o r a specified p eriod w ill again
b e co m e effe ctiv e upon th e e x p ira tio n o f such p e rio d . A licen se
w h ich is suspended in d efin itely m a y be resto re d b y the B oard ,
in its d iscretion , i f the B o a rd is satisfied th a t its restora tion
w ou ld n ot lead to fu r th e r viola tion s o f th is re g u la tio n and
w ou ld n ot be oth erw ise in com p a tib le w ith the p u b lic in terest.

( c ) Enforceability o f Contracts.— E x c e p t as m a y su bsequ en tly
be o th erw ise p rov id ed , all p ro v is io n s o f th is re g u la tio n a re
d esign a ted , p u rsu a n t to section 2 ( d ) o f the E x e cu tiv e O rder, as
b e in g “ f o r a d m in istra tiv e p u rp oses” w ith in the m ea n in g o f said
se ction 2 ( d ) , w h ich p ro v id e s th a t n on com p lia n ce w ith p ro v is io n s
o f the reg u la tion so d esign a ted shall n ot a ffe ct the rig h t to en­
fo r c e con tra cts.
" I n ad d itio n , section 604 o f th e D efen se P roduction A c t o f 1950 au th orizes
the B oard to in stitu te co u rt proceedings to restrain violation s and to com ­
pel com p lian ce w ith th e reg u la tio n or an y order o f the B oard m ade in pur­
suan ce th e reo f.
F u rth erm o re , section 603 o f such A c t p rovides th a t “ A n y
person w ho w illfu lly violates an y provision o f section 601 [ o f the A c t ]
* * * o r an y reg u la tio n o r ord er issued thereun d er, upon conviction th e r e o f,
sh a ll be fined not m ore th an $ 5 ,0 0 0 o r im prisoned not m ore than one y e a r
or b o th .”




REGU LATIO N W

15

( d ) Clerical E rrors. — A n y fa ilu r e to com p ly w ith th is re g u la ­
tion resu ltin g fr o m a m istak e in d eterm in in g , ca lcu la tin g , o r
r e c o rd in g a ny p rice, d ow n paym ent, o r cre d it, o r oth er sim ila r
m atter, shall n ot be con stru ed to be a viola tion o f th is reg u la tion
i f the R e g istra n t establish es th a t such fa ilu r e to com p ly w as
the resu lt o f excu sable e r r o r and w a s n ot occa sion ed b y a re g u la r
cou rse o f dealing.
( e ) N oncom pliance Due to Facts Outside Registrant’ s Knowl­
edge.— T h e p ro h ib itio n s o f this reg u la tion shall n ot a pp ly to a
R e g istra n t w ith re s p e ct to a n y fa ilu r e to co m p ly w ith th is re g u ­
lation in con n ection w ith (1 ) a cre d it exten d ed b y h im if, at
the tim e th e re o f, he did n ot k n o w o r h ave rea son to k n o w an y
fa c t b y reason o f w h ich such cr e d it fa ile d to c o m p ly ; (2 ) an
ob lig a tio n p u rch ased , d iscou n ted , o r a cq u ired as collateral by
him if, w hen he p u rch a sed o r d iscou n ted the o b lig a tio n o r
acq u ired it as collateral, the ob lig a tio n did n o t sh ow on its fa c e
a ny fa ilu re to co m p ly and he did n ot k n o w a n y fa c t b y reason
o f w h ich the cr e d it g iv in g rise to th e ob lig a tio n fa ile d to co m ­
p ly ; o r ( 3 ) an ob lig a tio n ren ew ed, rev ised , o r con solid a ted b y
him if, at th e tim e w hen he ren ew ed, revised , o r con solid ated it,
he did n ot k n o w o r have reason to k n o w any f a c t b y reason o f
w h ich such ren ew al, rev ision , o r con solid a tion fa ile d to com p ly.
W ith resp ect to a n y loan on th e se c u r ity o f an ob lig a tio n w h ich
a rises out o f a cr e d it su b je c t to th is reg u la tion , th e p ro h ib itio n s
o f th is reg u la tion shall be deem ed to a p p ly on ly to p aym en ts
a ris in g out o f the ob lig a tio n ra th er than to p aym en ts a ris in g
ou t o f the loan.

( f ) Transactions Outside United States.— N o th in g in th is re g u ­
lation shall a pp ly w ith resp ect to a ny c r e d it exten d ed in A laska,
the P a n am a Canal Z on e, o r a n y te r r ito r y o r p ossession ou tsid e
the con tin en tal U n ited States.
( g ) Right o f Registrant to Im pose Stricter R equirem ents.— Any
R e g istra n t has th e rig h t to re fu s e to exten d cre d it, o r to extend
less cr e d it th an th e a m ou nt p erm itted b y th is reg u la tion , o r to
req u ire th a t rep a y m en t be m ade w ith in a s h o rte r p eriod than
th e m a xim u m p erm itted b y th is reg u la tion .

( h ) Contracts Outstanding on Effective Date o f Regulation.—
N o th in g in th is reg u la tion shall p rev en t the p e rfo rm a n ce o f a n y
va lid co n tra ct o r ob lig a tio n en tered in to p r io r to the effectiv e
date o f th is r e g u la tio n ; but, w h en an y ob lig a tio n a risin g out
o f an y cr e d it exten d ed p r io r to such date is com bin ed w ith a n y




16

REGU LATIO N W

c r e d it exten d ed on o r a fte r
ren ew al o r rev ision m ade on
b e trea ted f o r the p u rp oses
exten d ed on the date o f such

such d ate o r is the s u b je c t o f any
o r a fte r such date, such cr e d it shall
o f th is reg u la tion as h a v in g been
con solid a tion , ren ew al, o r rev ision .

( i ) Transactions Subjected to Regulation by Am endm ent.—
W h en ev er th is reg u la tion is a m ended to add an y a rticle to the
list o f a rticles in the S u p p lem en t o r so as to a p p ly to a ny a d d i­
tion al class o f tra n sa ction s, the a m en dm en t shall n ot p reven t
th e p e rfo rm a n ce o f a n y va lid co n tr a c t m ade p r io r to the effectiv e
d ate o f the a m e n d m e n t; bu t a ny ren ew al, re v isio n , o r co n s o lid a ­
tion o f a n y ob lig a tio n a ris in g fr o m a cr e d it c o v e rin g such n ew ly
add ed a rticle o r class o f tra n sa ction s shall be s u b je c t to the
a p p lica b le req u irem en ts o f th is reg u la tion .

( j ) Definitions.— F o r the p u rp oses o f th is reg u la tion , unless
th e con te x t oth erw ise re q u ir e s :
( 1 ) “ P e r s o n ” has the m ea n in g g iv en it in su b section ( a ) o f
se ction 702 o f the D efen se P ro d u ctio n A c t o f 1950.7
(2 )

“ R e g is tr a n t” -has the m ea n in g g iv e n it in section 2 ( a ) .

( 3 ) “ C re d it” m eans “ E x ten sion o f c r e d it ” as defined in the
E x e cu tiv e O rd e r.8
( 4 ) “ In sta lm en t C re d it” m eans a cr e d it w h ich the o b lig o r
un dertak es to rep a y in tw o o r m ore scheduled p aym en ts o r as to
w h ich the o b lig o r u n dertak es to m ake tw o o r m o re scheduled
p aym ents o r d ep osits usable to liquidate the cre d it, o r w h ich
h as a sim ila r p u rp ose o r effect.
7 Such A c t p rovides th a t “ T he w ord ‘ person’ includes an in d ividu al, cor­
poration , p artn ersh ip , asso cia tio n , or an y oth er organized grou p o f p ersons,
o r leg a l successor or rep resen tative o f the fo re g o in g , and includes the U n ited
S ta te s o r an y agen cy th e reo f, or an y oth er g o ve rn m en t, or an y o f its political
subd ivision s, o r a n y agen cy o f the fo r e g o in g : P rovided, T h a t no p unishm ent
provided by th is A c t shall ap p ly to th e U n ite d S ta te s, or to an y such g o ve rn ­
m en t, political subd ivision, or go vern m en t a g en cy.”
'T h e p ertin en t p a r t o f the E x e cu tiv e O rd er reads as fo llo w ^ : “ E xten sion
o f cred it” m ean s an y loan or m o r tg a g e ; an y in stalm en t purchase contract,
an y conditional sales co n tract, or an y sale or co n tract o f sale under which
p art or all o f the price is p ayable subsequent to the m a k in g o f such sale or
c o n tr a c t; an y re n tal-p u rch ase co n tract, or an y co n tract f o r the ba ilm en t or
lea sin g o f p ro p erty under w hich the bailee or lessee eith er has the option of
becom in g the ow ner th e reo f or o b ligates h im s e lf to p a y as com pensation a
sum su b sta n tia lly eq uivalen t to o r in excess o f th e value t h e r e o f; an y con­
tr a c t cr e a tin g an y lien o r sim ila r claim o r p ro p erty to be discharged by
the p ay m en t o f m o n e y ; an y p u rchase, discount, or other acquisition o f , or
an y extension o f cred it upon the secu rity o f, a n y ob ligation or claim arisin g
out o f an y o f the fo r e g o in g ; and an y tran sa ctio n or series o f tran sa ctio n s
h a v in g a sim ila r pu rpose or effect.




REGULATION W

17

( 5 ) “ In sta lm en t S a le” m eans an in sta lm en t cre d it in a p rin ­
cip a l a m ou n t o f $5,000 o r less “ w h ich is m ade as p rin cip a l,
a gen t, o r b rok er, by an y seller o f a n y a rticle listed in th e S u p ple­
m en t to th is reg u la tion (h erein called a “ listed a rticle ” ) and
w h ich arises ou t o f a sale o f such listed article. F o r th is p u r­
p ose, “ sale” in clu d es a lease, b ailm en t, o r oth e r a rra n g em en t
f o r the use o f p ro p e rty , o r a ny oth er tra n sa ction , w h ich is sim ilar
in p u rp ose o r e ffect to a sale.
(6 ) “ In sta lm en t L oa n ” m eans an in sta lm en t cre d it, oth e r than
an in stalm en t sale, in the fo r m o f a loan w h ich is in a p rin cip a l
a m ou n t o f $5,000 o r less;'' bu t the d efin ition does n ot include
a n y loan u pon th e s e c u r ity o f a ny ob lig a tion w h ich arises ou t o f
a n y instalm en t sale o r instalm en t loan.
(7 ) “ C ash P r ic e ” m eans the bona fide cash p u rch a se p rice o f
an a rticle (n e t o f a n y reb a te o r sales d is c o u n t ), in clu d in g the
bona fide cash p u rch a se p rice o f a ny a ccessories, the bona fide
ch a rg e f o r a ny serv ices sold o r financed in co n n e ctio n w ith the
a rticle, an y bon a fide ch a rg es f o r d e liv e ry o r in sta llation , and
a n y a p p lica b le sales taxes, bu t ex clu d in g an y ch a rg e s f o r in te r­
est, finance, o r insurance.
MC ertain in sta lm e n t sales and in sta lm e n t loa n s, in clu d in g som e th a t are
in a prin cipal am ou n t exceedin g $ 2 ,5 0 0 , are exem pted fr o m the regulation
b y section 7.




18

REGU LATION W

SUPPLEMENT TO REGULATION W
Part 1.

Listed Articles, Down Payments, Loan Values.— For

the p u rp oses o f R egu la tion W , the fo llo w in g a rticles, w h eth er
n ew o r used, a re “ listed a rticle s,” and th e fo llo w in g requ ired
d o w n p aym en ts and m a xim u m loan valu es are p re scrib e d (su ch
d ow n p aym en ts and loan values to be calcu lated as specified in
P a rts 4 and 5 o f th is S u p p lem en t) ; b u t such d o w n p a y m e n t and
loan va lu e re q u ire m en ts shall n ot a p p ly in the case o f a listed
a rticle h a v in g a cash p rice o f less than $100, e x clu siv e o f an y
a p p lica b le sales t a x : 10
G rou p A — 3 3 y 3 p e r c e n t m in im u m dow n p a y m en t, 6 6 /
2z p e r
c e n t m a xim u m loan v a lu e :
1. A u tom ob iles (p a sse n g e r ca rs d esign ed f o r the p u rp ose
o f tr a n s p o r tin g less than 10 passen gers, in clu d in g
t a x ic a b s ) .
G rou p B — 15 p e r ce n t m in im um d ow n p a y m en t, 85 p e r cen t
m a xim u m loan v a lu e :
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

C o o k in g stoves and ra n ges, design ed f o r h ou seh old use.
D ish w ash ers, m echan ical, d esign ed f o r h ousehold use.
Iro n e rs d esign ed f o r h ou seh old use.
R e fr ig e r a to r s and fo o d fre e z e rs , m echan ical, d esign ed
f o r h ou sehold use.
W a s h in g m a ch ines o r cloth es d r y in g m ach ines d esign ed
f o r h ou seh old use.
C om bin ation units in c o rp o ra tin g a ny listed a rticle in the
fo r e g o in g cla ssifica tion s o f th is G rou p B.
A ir co n d ition ers, room uni t ; d ehum idifiers, m echan ical.
R a d io o r television re c e iv in g sets, p h on og ra p h s, o r co m ­
bin ation s.
S e w in g m achines d esign ed f o r h ou sehold use.
S u ction clea n ers d esign ed f o r h ousehold use.

G rou p C — 10 p e r cen t m in im u m d ow n p a y m en t, 90 p e r cen t
m a xim u m loan v a lu e :
1. F u rn itu re, h ou seh old (in clu d in g ice re fr ig e r a to rs , bed
sp rin g s, m a ttresses, and la m p s) ; and flo o r co v e rin g s,
s o ft su rfa ce.
T he exclusion o f sales ta x e s in th is p a r t o f the S u p p lem en t does not affect
the use o f the term “ C ash P ric e ” elsew here in the reg u la tio n . “ C ash P r ic e "
a s defined in section 8 ( j ) ( 7 ) g e n e ra lly includes app licab le sales ta xes.




19

REGU LATIO N W

G rou p D — 10 p e r cen t m in im u m d ow n p a y m en t, 90 p e r cen t
m a xim u m loan v a lu e:
R esid en tia l re p a irs , a ltera tion s, o r im p r o v e m en ts.— M ate­
rials, a rticles, and services (o th e r than a rticles listed
elsew h ere in the S u p p lem en t) in co n n e ctio n w ith re ­
p airs, alteration s, o r im p rovem en ts u pon urban, su bu r­
ban, o r ru ral real p ro p e rty in co n n ectio n w ith e x is tin g
stru ctu res. T h is does n ot relate to stru ctu res, o r dis­
tin ct p a rts th e re o f, w h ich as so rep a ired , altered, o r im ­
p roved a re d esign ed ex clu siv ely f o r n on resid en tia l use.

Part 2. Maturities.— T h e m a xim u m m a tu rities
a rticles and f o r u nclassified instalm en t loans a r e :

fo r

listed

G rou p A .................................................................... ..21 m on th s
G rou p B .................................................................... ..18 m on th s
G rou p C .................................................................... ..18 m onths
G rou p D .................................................................... .30 m on th s
U nclassified In stalm en t L o a n s ............................18 m on th s

Part 3. R efinancing Pursuant to Statement o f Changed Con­
ditions. — T h e m a xim u m m a tu rity o f a n y refin a n cin g p u rsu a n t
to a S tatem en t o f C h an ged C on d ition s as specified in section
5 ( b ) is 24 m onths.

Part 4.

Calculation o f Down Payments fo r Autom obiles.—

T h e m a xim u m loan valu e o f a n y a u tom ob ile shall be the specified
p e rce n ta g e o f the cash p rice o r o f th e “ a p p ra isa l gu id e v a lu e,”
w h ich e v e r is low er, and the req u ired d ow n p aym en t shall be
th e d iffe re n ce b etw een the cash p rice and th e m a xim u m loan
valu e as so calcu lated.
Such req u ired d ow n p aym en t in the
case o f an a u tom obile m a y be ob tain ed in th e fo r m o f cash,
trad e-in , o r both.
“ A p p ra isa l gu id e va lu e,” f o r a ny g iv en p eriod , m eans the
estim ated a v era g e retail valu e as stated in the ed ition and issue
d esign ated by the B oard f o r th a t p eriod o f a ny reg u la rly
p u blish ed a u tom ob ile a pp ra isa l g u id e d esign a ted b y the B oard
f o r th is p u rp ose, as to gu ide, ed ition , and issue, f o r use in the
te r r ito r y in w h ich such a u tom obile is sold, p lu s an y a p p lica b le
sales taxes. In fo rm a tio n as to th e gu id e o r gu ides, and ed ition s
and issu es th e re o f, d esign a ted f o r a n y g iv en te r r ito r y m a y be
o b tain ed fr o m a ny F ed era l R eserv e B an k o r branch .




20

REGULATIO N W

Part 5. Calculation o f Down Payments fo r Articles in Groups
B, C, and D.— In the case o f an y a rticle listed in G rou p B, G rou p
C, o r G rou p D, the req u ired d ow n p a ym en t and the m a xim u m
loan valu e shall be ( 1 ) the specified p erce n ta g e o f th e cash p rice
o f th e a rticle, o r ( 2 ) , in the even t o f a trad e-in b y th e p u rch a ser,
th e specified p ercen ta ge o f the n et p rice o f th e listed a rticle
a fte r d ed u ctin g fr o m the cash p rice o f that a rticle the a m ou nt
allow ed f o r the trad e-in . S uch d ow n p a ym en t shall be obtain ed
in cash in a d d ition to a ny tra d e-in .
I f the cash p rice o f an a rticle listed in G rou p D ca n n o t be
d eterm in ed at the tim e th e req u ired d ow n p aym en t m u st be
ob tain ed o r at the tim e o f the loan, ( 1 ) the R e g istr a n t m ay
su bstitu te f o r the cash p rice in ca lcu la tin g such d ow n p aym en t
a bon a fide estim ated ca sh p rice , o r (2 ) the b o r r o w e r m ay
su bstitu te f o r the cash p rice, and in ca lcu la tin g th e m a xim u m
loan value the R e g istra n t m a y re ly in g oo d fa ith on, a bona fide
estim ated cash p rice as so stated in the S tatem en t o f the
B o rr o w e r.




LIST OF FEDERAL RESERVE BANKS AND BRANCHES
Address

Federal Reserve Bank of
BOSTON

30 Pearl Street. Boston 6. Massachusetts

N E W YORK
Buffalo Branch

33 Liberty Street. New York 45. New York
270-276 M ain Street. Buffalo 5. N ew York

P H IL A D E L P H IA

925 Chestnut Street. Philadelphia 1. Pennsylvania

CLEVELAND

East 6th Street and Superior Avenue. Cleveland
Ohio
4th and Race Streets, Cincinnati 1. Ohio
717 Grant Street. Pittsburgh 19. Pennsylvania

Cincinnati Branch
Pittsburgh Branch
R IC H M O N D
Baltimore Branch
Charlotte Branch

1.

C H IC A G O
Detroit Branch

9th and Franklin Streets, Richmond 13. Virginia
Calvert and Lexington Streets, Baltimore 3. Maryland
South Tryon and 2nd Streets. Charlotte 1. N oH h
Carolina
104 M arietta Street. Atlanta 3. Georgia
18th Street and 5th Avenue, North, Birmingham 2.
Alabama
Church and Hogan Streets. Jacksonville 1. Florida
228 3rd Avenue. N orth, Nashville 3. Tennessee
Carondelet and C om m on Streets, New Orleans 11.
Louisiana
230 South LaSalle Street. Chicago 90. Illinois
160 Fort Street. W e st. Detroit 31. M ichigan

S T . L O U IS
Little Rock Branch
Louisville Branch
M em phis Branch

411
121
5th
3rd

M IN N E A P O L I S
Helena Branch

73 South 5th Street. Minneapolis 2. M innesota
Park Avenue and Lawrence Street. Helena, M ontana

K A N SA S C IT Y

10th Street and Grand Avenue. Kansas C ity 18, M is­
souri
17th and Arapahoe. Denver 17. Colorado
226 W e s t 3rd Street, Oklahoma C ity 1. Oklahoma
1701-5 Dodge Street. Omaha 2. Nebraska

ATLANTA
Birmingham Branch
Jacksonville Branch
Nashville Branch
New Orleans Branch

Denver Branch
Oklahoma C ity Branch
Omaha Branch

Locust Street, St. Louis 2. Missouri
W est 3rd Street. Little R ock. Arkansas
and M arket Streets. Louisville 1. Kentucky
and Jefferson Streets. M em phis 1, Tennessee

DALLAS
El Paso Branch
Houston Branch
San Antonio Branch

W ood and Akard Streets. Dallas 13. Texas
351 M yrtle Avenue. El Paso. Texas
1301 Texas Avenue. Houston 1, Texas
Navarro and Villita Streets. San Antonio 6. Texas

S A N F R A N C IS C O

Sacramento and Sansome Streets, San Francisco 20.
California
409 W est Olym pic Boulevard. Los Angeles 54. Cali­
fornia
6th and Oak Streets, Portland 8. Oregon
70 East South T em ple Street. Salt Lake C ity 9. Utah
2nd Avenue and Spring Street. Seattle 14. Washington

Los Angeles Branch
Portland Branch
Salt Lake C ity Branch
Seattle Branch




FEDERAL RESERVE SYSTEM
BOUNDARIES OF F E D E R A L R E S E R V E D1STRIGT3
AND THEIR BRANCH TER R ITO R IE S

msa---BOUNDARIES

OF FEDERAL RESERVE DISTRICTS

-----------BOUNDARIES OF FEDERAL RESERVE BRANCH TERRITORIES
•
•

BOARD OF GOVERNORS OF TH E FEDERAL RESERVE S Y ST E M
F E D E R A L R E S E R V E BANK OtTIES


•
F E D E R A L R E SER V E


BRANCH C f f l O

oorottn t « i i
boako or toYt**o*> or m r n o r m KOI'

-rrm