The Filene Research Institute's new accessible financial services incubator will test a National Credit Union Foundation auto loan program that is aimed at lower income borrowers, the NCUF said.
Funding in part by the Ford Foundation, the incubator tests, packages and scales innovative, viable financial products that benefit low-and-moderate-income US consumers, the NCUF said when making the announcement.
“Eighty-eight percent of Americans drive to work and without a car, a person's options for work, groceries, child care and/or health care become extremely limited and can keep a person mired in poverty,” said Gigi Hyland, NCUF Executive Director. “This program helps credit unions offer non-prime auto loans to consumers who can benefit the most from a safe, reliable used car. In doing so, consumers avoid the costly pitfalls that come with buying from the corner buy-here-pay-here auto lots and other predatory lenders.”
The Foundation said that the auto program that Filene will test was developed with an eye toward letting lower income credit union members have access to an automobile while allowing them to pay their car note according to the Lower Income for Timeliness principals. Those principles, which are known as LIFT, reward borrowers for making payments on time rather than simply punish them for paying late.
“We searched nationwide to find financial products that are innovative in ways that benefit low-and-moderate-income consumers,” said Cynthia Campbell, director of innovation labs at Filene. “Chosen from more than 20 submissions, NCUF's non-prime auto lending program shows promise of doing just that.”
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