Predatory Lending Relief From Detroit CU
When it comes to buying a car, many members of Communicating Arts Credit Union face choices limited to buy-here-pay-here lots with some rates as high as 20% or more.
Hank Hubbard, president/CEO of the $33 million community development credit union in Detroit, is hoping a new program will offer a fresh alternative through its “Auto Bailout” promotion.
For example, if a member is paying a 24% annual percentage rate on a five-year, $20,000 vehicle loan, the loan payment would be $575.36 with $14,521.56 in interest. With an Auto Bailout loan, the member could refinance to a 12% APR for the same term and end up with a $444.89 monthly payments and $6,693.34 in interest. The total savings would be $130.47 per month and $7,828.22 in interest over the life of the loan.
So far, 20 loans have been approved since the program that began Jan. 1, Hubbard said. CACU’s goal is to do 100 loans or until the grant funds run out.
“We do loans to D and E paper all the time. We do underwrite them,” Hubbard said. “Our delinquency and charge-off rates are higher than our peers. The kinds of loans we make would make other credit unions freak out.”
But as a CDCU, developing the community that it serves is an ongoing mission, Hubbard said. For its efforts, the credit union was named Credit Union Times’ 2010 Trailblazer award winner for outstanding service to the underserved.