NCUF Releases Non-Prime Auto Loan Toolkit

Posted: 2011-10-21 00:00:00

Madison, Wis. – Credit unions trying to boost their auto loan portfolios now have an added aid, a Non-Prime Auto Loan Toolkit, recently released from the National Credit Union Foundation’s REAL Solutions program.

Many households are struggling financially and a dependable automobile can be the key to having a job or having a better paying job. Many of these households may look at the corner buy-here-pay-here auto lot as their only option and find themselves caught in a costly loan and an unreliable car.

“There is tremendous opportunity for credit unions to reach out to this market that has been mis-served by predatory and non-traditional lenders,” writes Nancy Pierce in the toolkit’s introduction. “The estimated size of the non-prime auto market ranges from $100 billion to $200 billion. Yet, as credit unions put more non-prime borrowers into automobiles, they need to do so prudently and with clear understanding of the increased risks they are undertaking.”

According to the Annie E. Casey Foundation, 88% of American workers drive to work and two-thirds of jobs are located in suburbs. Relying on public transportation, if available, can double commute time. In fact, the Annie E. Casey Foundation reports that not having a car is the single biggest barrier to escaping poverty.

The new toolkit is designed to help guide credit unions through some of these dangers. It also suggests Enterprise Car Sales as one option for a quality car at a good value. The toolkit provides underwriting guidelines, techniques to mitigate risks, pricing guides, credit union examples, and a loan portfolio management guide.

“Prudent pricing for non-prime auto loans can boost a credit union’s bottom line,” notes Pierce. “It also simultaneously fulfills a social and economic need by provide consumers with the economic mobility that comes with the mobility of affordable, reliable wheels.”

The toolkit is available to credit unions free of charge at realsolutions.coop.

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About REAL Solutions®

REAL Solutions® is the signature program of the National Credit Union Foundation. REAL ― “Relevant, Effective, Asset-building, Loyalty-producing” — Solutions works to help credit unions offer a wide range of products and services that have proven successful in serving working families with low wealth and modest means. Using product/business models created and tested by credit unions, REAL Solutions disseminates information to credit unions through special meetings, an online impact center at www.realsolutions.coop, and state and national conferences. As NCUF’s signature program over the past four years, REAL Solutions has been adopted in 40 states and is saving members tens of millions of dollars. It has now become a documented business strategy for credit unions to grow their memberships by serving the underserved. Real people with real needs are finding REAL Solutions at credit unions.

About the National Credit Union Foundation (ncuf.coop):

The National Credit Union Foundation is the US credit union movement’s primary national philanthropic program provider, fundraiser and grant-maker. Through NCUF grants and programs, credit unions provide widespread financial education, create greater access to affordable financial services, and empower more consumers to save, build assets, and own homes.

NCUF is funded primarily by investments in the award-winning Community Investment Fund (CIF) and by generous Corporate Supporters led by the Credit Union National Association and CUNA Mutual.  All NCUF donors provide support that empowers NCUF and state credit union foundations to make a real impact in the credit union community.

The National Credit Union Foundation is a 501(c)(3) tax-exempt charitable organization. NCUF continues to earn the Better Business Bureau seal of approval as an “Accredited Charity” for meeting all 20 BBB Wise Giving Alliance Standards for national charities.