WASHINGTON — Auto loan volume is taking a plunge and the people likely more affected by narrower access to sensible credit–lower-income Americans–are also more likely to be the ones targeted by predatory lenders.
So the National Credit Union Foundation has ramped up plans for its Steer Clear Auto Lending Summit, to be held July 22 at Credit Union House on Capitol Hill in Washington, D.C.
With co-sponsorship from the Annie E. Casey Foundation and the Aspen Institute, the summit will offer findings based on new nationally funded research on best practices in credit union auto lending to non-prime borrowers–particularly working families with low wealth and modest income. A special preview of the joint research report exploring how credit unions help car buyers steer clear of predatory loans will also be unveiled, as will used car lending models that help CUs to better meet the needs of nonprime borrowers.
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Steve Delfin, executive director of the NCUF, said the idea for the summit evolved from the Filene Institute's program to identify financial products especially targeted for lower-income CU members. "Filene doesn't do programs, but we do," said Delfin. "Lois Kitsch has been running it now for 17 months and at first we hoped to engage 15 CU leagues and maybe 30 credit unions. But the response has been overwhelming. We now have 500 participating credit unions."
The partnership brings together the Anne E. Casey Foundation and the Aspen Institute, where Bill Myers, the field coach for NCUF's Real Solutions program, is a senior fellow. The Casey Foundation has a family economic focus, said Delfin, and was already looking into the subprime auto lending area. When Myers and Kitsch took those early research efforts further, adding the Aspen Institute's contribution, and the NCUF's own funding, a partnership of three seemed to make for the best outcome.
The team found and analyzed CU programs that successfully ran subprime auto loan programs and will share how it's done, said Delfin. "We'll have representatives from four credit unions present to their peers and they'll also be reps from various community groups."
Myers, will be at the summit, as will Kirsten Moy, director of the economic opportunities program for the Aspen Institute, and Beadsie Woo, senior fellow for the Annie E. Casey Foundation.
The need for CUs to champion these kinds of programs fits with their lending philosophy and also makes sense from a balance sheet approach, said Delfin. He noted that 85% of Americans use a car to get to work and public transportation is not readily available in many communities. If managed well, a subprime auto program doesn't have to be a money-drain, research indicated. Still, credit unions serve only 5% of the $8 billion market that caters to low- and moderate-income borrowers. And those borrowers pay exorbitant rates, making it more difficult to afford monthly payments.
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