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 18-month pilot program recently closed,
with 11 credit unions participating across the country. Non-Prime Auto Loans, a Foundation REAL Solutions product, was one
five products in the Filene’s accessible
services incubator funded by the Ford Foundation and was selected to move to an advanced testing phase based on each
product’s consumer impact, ease of use/implementation, marketplace
demand, and positive return on investment.
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.
During the pilot, over $102 million was lent to borrowers with an average interest rate of 11.47%. Over 7,605 loans were closed. Considering the
average borrower credit score of 581, the rates are lower than what most
consumers would have received elsewhere.
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.