Fannie Clac Puts Low, Moderate Income Families on Wheels

LEBANON, N.H. – A fledgling program to help low- and moderate-income families buy new cars is being rolled out here and in Keene, with Upper Valley Credit Union and Chittenden Bank as partners. Known as Fannie Clac, the non-profit organization offers financial literacy classes before referring clients to the participating financial institutions. As of mid-October, 76 people had graduated from the sessions. The agency stresses 97%of the clients have never had a late payment since completing the course. There is already interest in launching similar efforts in other areas. But the president, Robert Chambers, says it’s simply too early to know if the program can be sustained and replicated elsewhere. Even though possible expansion “is on my radar,” he stresses the project is still in an incubator stage. In effect, Fannie Clac acts as an indirect lender working with the UVCU, the bank and local car dealers to provide loans at rates as low as 4.9%. That compares with 25 to 29% they might otherwise pay, if they could qualify for a loan at all. Stephen Bentley, CEO of UVCU, explains the credit union got involved when Fannie Clac solicited its help. “We just felt the program fit very well with our credit union mission, that mission obviously being to provide financial services to our members in a variety of ways, one being various programs we can offer them as well as a certain amount of education,” Bentley says. “One of the neat things with Fannie Clac is in order to get clients to a point where they can comfortably come into a bank or a credit union for a loan to purchase a new vehicle, they run those clients through a fairly rigorous financial management program.” Fannie Clac also helps build a credit file when needed by getting letters from sources such as landlords and employers. The agency then supports each loan with a $2,000 guarantee. The guarantee allows UVCU to be as flexible as possible, even if the client has marginal credit based on the credit union’s underwriting guidelines. That $2,000 goes into a checking account maintained in Fannie Clac’s name. The credit union can tap the money in case of default. So far, with perhaps 25 Fannie Clac clients carrying loans at UVCU, that hasn’t happened. Bentley believes the program makes sense in providing people an alternative to high-rate loans on undependable used vehicles that hit them with constant repair bills. One plus for Fannie Clac is the fact Chambers and Leo Hamill, the two men who launched the program, had worked in retail car sales and have in-depth knowledge of the business. Fannie Clac spokesperson Lindsay Hoffman notes one of the challenges is getting people to realize a new vehicle may well turn out to be less expensive than a used one. “It’s a psychological hurdle we have to overcome because most people who come to our program have never bought a new car. They never even thought it was possible,” Hoffman says. -