Removing Barriers Blog

AAA Releases Study One-Third of Car Owners Cannot Afford Emergency Repairs
Posted May 26,2017 by CUNA Advocacy

Earlier this spring, AAA released a study stating one-third of American car owners cannot afford surprise repairs of $500-600 on their automobiles.  While AAA was surprised by these results, the National Credit Union Foundation has also found that two-thirds of Americas are living paycheck to paycheck and more than half of Americans have no savings to withstand an economic set back – like a broken-down car or a trip to the emergency room.

Unfortunately, people in these situations do not always have many options of where to turn for help. Many credit unions offer products and services that can help meet these needs including voluntary insurance products that can help cover expenses. Additionally, credit unions also offer small dollar loans to help their members in a time of need or during an emergency.  However, the CFPB’s proposed rule on small dollar loans – which should be targeting predatory lending – has threatened both of these options.

Specifically, the CFPB’s proposed rule threatens the ability of credit unions to provide insurance products by sweeping them into an “all-in” APR calculation. Even though credit unions often provide the safest and most affordable options for these products.

If the small dollar rule is finalized, the only option for many American consumers could be less, or unregulated, predatory loans.

During the open comment period, CUNA sent a comprehensive letter to the CFPB outlining changes that should be made to the rule and why credit unions should be exempt.  While not all financial problems are avoidable, CUNA will continue to work with the National Credit Union Foundation to teach and encourage savings and financial literacy for all Americans.