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Used-auto loan drive accelerated by grant
CHICAGO (11/5/08)--The National Credit Union Foundation (NCUF) has
Immigrants Caroline Anugioba and her son stand by their 2002 Hyundai Santa Fe financed in 2008 at North Side Community FCU in Chicago. (Photo provided by the National Credit Union Foundation)
approved a $35,000 Innovation Grant to accelerate North Side Community FCU’s drive to help more low-wealth borrowers afford cars. In an underserved area where many subprime auto lenders charge higher rates than the 18% federal usury limit, North Side Community FCU in Chicago will use the grant to reach members who need to refinance subprime loans. The credit union also will target “upside down” loans, where members’ outstanding balance exceeds their car’s value. The $7 million asset credit union also will:
* Purchase quarterly reports from Trans Union to identify members who have auto loans with other lenders; * Partner with Payment Reporting Builds Credit (PRBC) to acquire a list of all “thin-file” credit reports that show a recent credit inquiry from auto dealerships on Chicago’s north side; * Consider offering credit enhancements that would protect each borrower and the credit union: such as guaranteed asset protection (GAP) insurance, mechanical breakdown insurance, disability and job loss insurance; * For “upside-down” borrowers with strong job histories and adequate credit histories, consider financing over 100% of their car’s value with GAP insurance added to the loan pricing.
Successful models will be incorporated into NCUF’s signature program, REAL Solutions. North Side Community FCU is one of hundreds of credit unions offering affordable products and services through REAL Solutions, NCUF said.
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