Foundation shows driving success of non-prime auto loans
The National Credit Union Foundation has released a new video to showcase its Non-Prime Auto Lending Program.
The foundation, in partnership with the Filene Research Institute, is working to assist low- and moderate-income consumers with its product incubator for non-prime auto loans.
The 18-month pilot program recently closed, with 10 credit unions participating nationwide. The video is comprised of two in-depth member testimonials and provides an overview of non-prime auto lending from University FCU, Austin, Texas, one of the pilot participants.
The foundation recently released an implementation guide and feasibility study report to help credit unions interested in offering these types of auto loans.
“Non-prime auto lending is a great example of what many refer to as ‘doing well by doing good,” said Lois Kitsch, Foundation National program director. “These types of loans are proven to be both good for the member and for the credit union.”
During the foundation's pilot, more than $102 million was loaned to borrowers with an average interest rate of 11.47%. Over 7,605 loans were closed. Considering the average borrower credit score of 581, the rates are lower than what most consumers would have received elsewhere.
Non-prime refers to the practice of making loans to borrowers with weak or no credit histories or limited payment capacity. Research shows there is a tremendous opportunity for credit unions to reach out to a market that has been disserved by predatory lenders and under-served by traditional lenders.