JumpStarting a Member's Chances for Employment

As auto lending growth slows for credit unions, more credit unions are turning to unique alternatives to have a tangible positive impact on their members.

 
 
Market Conditions

Credit unions are facing an uphill battle when it comes to auto loans in 2008. Total vehicle sales in the U.S. declined 2.5% in 2007 and most predictions for 2008 see this trend continuing. This slowdown in sales is poised to have a direct impact on the ability for credit unions to grow their auto loan portfolios. The good news is that there are many opportunities available for credit unions that are willing to be proactive about the issue. As auto sales slow, recapture programs can be a growth catalyst for this key segment of the credit union loan portfolio. Used auto loans remain a strong point for credit unions, up 1.7% in 2007 to $90.9B in December despite the slowdown in sales. Dealer relationships are also set to become a key focus as indirect lending still offers many opportunities for growth in 2008 and beyond.

A Credit Union’s Response

JumpStart, a partnership between West Central Wisconsin Community Action Agency (West CAP) and WESTconsin Credit Union, is designed to help members into safe and affordable vehicles. For low-income single parents transportation is a critical issue. Yet, many find themselves unable to afford a reasonably priced, safe vehicle.

Initially the down payment is covered by West CAP through a no-interest loan, which is not due until after the vehicle is paid off; if the member does not default on their loan, the down payment is forgiven entirely. WESTconsin then offers a loan for the rest of the vehicle price with no additional fees. There are three versions of the JumpStart loan, each related to the member’s financial or family situation. Since implementation in 2000, the program has resulted in more than $1.1 million in loans to members who would have been unable to afford a vehicle otherwise.

The Member Impact

“JumpStart was a godsend for me. I had filed bankruptcy from a previous marriage, and my credit was shot. I could not get a car for the life of me. But, they are not just salespeople, they really help you. I was so thankful to be given a second chance. I had a small child and was trying to get my life in order.”

 

 

 

July 7, 2008


Comments

 
 
 
  • We have been doing something similar for the past five years. Our partner is our primary sponsor, Contra Costa County''s (California) Social Services Department, and their program is called KEYS, which is welfare to work program, in which we fund auto loans for welfare recipients getting back into the workforce. You can contact us for more information
    David Green