What began as a barbed but jocular exchange between consumer advocate Ralph Nader and Sen. Jake Garn (R-Utah) yesterday erupted into a strikingly personal and bitter confrontation over the 1976 death of Garn's wife in an automobile accident.

The incident occurred at a Senate Banking Committee hearing where Nader was testifying against Chrysler loan guarantees.

"If the American consumers knew what you've cost us in the name of consumerism, they'd run you out of the country," said Garn in opening the dramatic dialogue.

Nader replied: "I suspect, Sen. Garn, that some senator's personal tragedy might not have occured if the auto industry had listened to us in the early years . . ."

Cutting Nader off, Garn declared: "I take exception to that. I think that was one of the cruelest comments you have ever made. Yes, my wife died in an automobile accident and left me with four kids . . ."

"She could have been saved," Nader interjected.

Garn shot back: "You always know everything about everything, don't you? Do you know the circumstances of the accident? How it happened? Do you?"

Nader: "Yes."

Garn: "Then you tell me about it. Let's find out . . ."

Nader: "I'll tell you when this hearing is over."

Garn: "No, I want to settle this now. You made an assertion. Let's put some facts with your assertion."

Nader: "It was a crash in Utah."

Garn: "No, it was not. It was in Nebraska. Typical of your research."

Nader: "That's hardly [relevant] . . . It was a crash under 60 miles an hour, and that should be survivable."

Garn: "It was not a crash. It involved no other vehicle . . ."

Nader: "It was a roll-over and a roll-over is exactly the kind of preventable [accident] that the auto industry could have designed for . . ."

Garn: "Are you aware she was wearing her seatbelt? Her seatbelt was on."

Nader: "Yes, I am."

Garn: "Were you aware that three of my children happened to be with her and had no seatbelts on at all and had no injuries whatsoever? . . .This is absolutely incredible . . . using my wife of 19 years to interject that into a hearing. What kind of human being are you?"

Nader: "Don't try to over-emote. I'm saying that safer cars could save many Americans, including people in crashes of that kind. And for you to try to pillory me because I'm trying to say your wife could have been saved from a casualty of that kind is irresponsible."

Garn: "No, no, no."

Nader: "I must continue to reply to your personal attack . . ."

Garn: "Just hold it right there . . . Absolutely incredible. you were not there. You did not experience it. You do not know the circumstances and for you to make the assertion that it happened to be the kind of car and that she would be alive if the auto industry had . . .

"You know what the first word I got in my office was, Mr. Nader? It was that my wife and all three of my four children had been killed. You ought to try that kind of shock sometime. Then don't question my concern for human life.

"You ought to live with it every day. You ought to see a 13-year-old boy now who doesn't have his own mother . . . and all the tragedies that causes . . . so don't you ever, ever, with me or anybody else, because of your politics, interject that kind of personal thing."

Nader: "You are not going to deny me the right to say that I was personally touched when I heard of your tragedy. You are not going to deny me the right to say that that personal tragedy could have been prevented. We have all been touched by tragedy and I would hope you will not subject this Congress to further melodramatic pillorying."

Garn: "It's not melodramtic pillorying. I suffered, Mr. Nader. Thank you for your concern but I hardly think it was in good taste at this time to bring up that kind of personal tragedy in a public hearing. That I cannot let pass."

Nader: "I think victims on the highway are very much to be observed at a public hearing. You get too abstract . . ."

Hazel Rhae Thompson Garn, 39 was killed Aug. 17, 1976, when her Plymouth Volare station wagon rolled over about 12 miles east of Sidney, Neb. She and three of the couple's four children were on their way from Salt Lake City to join Garn in Washington.