88% of Americans drive to work. Access to affordable and reliable used cars is a real need for low-wealth families trying to get ahead. Non-prime (thin file or low score) borrowers often turn to high cost loan providers such as buy-here pay-here stores to purchase cars. Oftentimes, these cars are of poor quality and cost far more than their book value.
Credit unions should lend to more non-prime borrowers because:
1) It is good business. Research shows that many credit unions are offering successful non-prime auto loan programs – both in terms of providing affordable cars loans to those who need them and as a sustainable business model for credit unions.
2) It is credit unions’ mission to serve families of modest means.
In partnership with the Annie E. Casey Foundation and the Aspen Institute, we released a research report, Steer Clear of Predatory Car Loans, in 2008. Authored by Bill Myers, REAL Solutions Field Coach, the report clearly outlines 7 lessons learned to successfully offer non-prime used auto loans. Listen to what Bill has to say about the opportunity to better serve low-wealth and modest income households. The report in its entirety is also available for free download.
Big thanks to Bill for his time and expertise this podcast. And to all of you: Thanks for listening!