The Foundation, in partnership with the Filene Research Institute
, is working to assist low-and-moderate-income
consumers with its product incubator for Non-Prime
Auto Loans. The pilot program was full by early 2014,
with 11 credit unions participating across the coun-try. Non-Prime Auto Loans, a Foundation REAL Solutions product, is one
five products in the Filene’s accessible
services incubator funded by the Ford Foundation.
Non-prime refers to the practice of making loans to borrowers with weak or no
credit histories or limited payment capacity. Our Non-Prime Auto Lending program helps lenders fairly
price and manage non-prime auto loans and is
based on the Foundation's extensive work in the area, which
includes previous grants and a comprehensive toolkit
for credit unions. The program helps consumers gain
access to reliable transportation which allows for increased access to
jobs, housing, schools and activities. Economic mobility is strengthened
through the mobility that comes with
affordable, reliable wheels.
After nine months of small scale testing, the credit unions have generated a $34 million portfolio comprised of 2,600 loans to individuals with an average credit score of 585 at an 11.6% average loan rate. None of the CUs have had to write off a single loan.
It is estimated that families can increase their income
by as much as 25% with access to reliable transportation. With 88% of Americans driving to work, this is a
huge need and also an opportunity for credit unions
to make a difference.