80% of Americans drive to work. Reliable transportation determines where a family lives, where there children go to school and what jobs they can work. Freedom First Federal Credit Union in Roanoke, Va. found one in twelve households in their region was unable to reach their maximum potential because they lacked reliable transportation. Estimates say that families can increase their income by as much as 25% with access to reliable transportation.
Roanoke resident Quandra Bonds is like many people who juggle a job, children and household responsibilities. Until recently, she did not have access to a car. This 29-year old primary care giver rode public transportation for errands and to work as a child care aide. “It was a struggle getting on the bus with groceries or with the laundry,” Bonds said.
With a $25,000 innovation grant this year from the National Credit Union Foundation, Freedom First Federal Credit Union partnered with Total Action Against Poverty, New River Community Action and Enterprise Car Sales to implement their Responsible Rides Auto Loan Program to help provide affordable and dependable transportation to low-income individuals.
Stephanie Klein-Davis | The Roanoke Times
Quandra Bonds rides in her new car, a Chevrolet Aveo, that she purchased through Responsible Rides. She said having her own car reduces her stress and saves her time.
“Freedom First FCU's program is meeting a tremendous need in their community,” said Tom Candell, NCUF Deputy Executive Director, COO/CFO. “It’s also a great example of partnership and ‘people helping people.’ This is one of the many ways that NCUF Innovation Grants are helping families achieve their financial goals.”
In January, the credit union received Bond’s loan application and now she is a proud car owner. The program is designed for borrowers not qualified for traditional vehicle financing because of no credit or a damaged credit history. The program is open to people whose household income is at or below 200 percent of the poverty level, or $44,000 for a family of four.
The loans rates for the program are 9.9% with a 60-month term which cover costs and increased risk. Pre-approved applicants are required to participate in financial education and car care maintenances classes. Once completed they work with the credit union to purchase a car for around $9,000 from Enterprise Car Sales who provide quality cars below blue book value to insure equity in each deal.
The program plans to offer up to 100 affordable automobiles in the next two years. As of October, 42 applications have been approved – which is a 43% approval rate, on loans that had only dismal hope in the not to distant past. The credit union has experienced no loan losses and has enjoyed a 1.98% loan yield (net of operating expenses, loan loss reserves, etc.). This may be due in part to monthly communication with the applicants.
Bonds pays about $200 (including insurance) per month for her 2008 Chevrolet Aveo - $80 a month less than she paid for bus and cab fares. On her first excursion out with her car she completed her weekly errands in half the time. Putting her shopping bags in the trunk “felt so good,” she said. “I’m still in shock.”
Quandra Bonds and the Responsible Rides program were originally highlighted earlier this year in the Roanoke Times.
NCUF Innovation Grants are made possible by supporters of the Foundation and the Community Investment Fund (CIF), an award-winning system of investments that help credit unions earn dividends while donating to national and state community development programs.
This “Innovation Grant at Work” is the first of a series highlighting NCUF grantees making a positive impact in their community and empowering consumers to achieve financial independence through credit unions.