MADISON, Wis. – Astronaut Janet Kavandi helped kick-off a pilot loan program with which five credit unions will provide financial incentives to subprime auto borrowers to encourage them to make timely payments and pay off their loans sooner.
The so-called LIFT loans-for Lower Interest for Timeliness—were designed by Filene Research Institute’s i3 innovation program and are aimed at providing incentives for healthy financial habits. As users make timely payments on their loan, they are rewarded with a lower interest rate. LIFT allows users to pay off their loans faster and reduce the amount of interest paid. It also helps them establish healthy financial behaviors and earn the opportunity to bring down their interest rate.
Kavandi, the director of Flight Crew Operations at NASA's Johnson Space Center, spoke to Filene and five partner credit unions during the launch of this i3 idea yesterday. Astronaut Janet Kavandi spoke to the assembled group about her experiences in space on three different missions and about how to plan, train for, and execute a complex mission. Credit unions piloting LIFT face all of these challenges as they recruit and test this innovative loan program with more than 1,200 consumers.
The pilot was funded through a $1.5 million grant from the Center for Financial Services Innovation. The University of Wisconsin-Madison's Center for Financial Security will study automobile loans to 1,200 LMI consumers with subprime credit scores, with the results to be published in 2013.
Credit unions participating in the pilot are: Del Norte CU, Industrial CU, Innovations CU, Public Service CU and Vermont FCU.
