BATON ROUGE, La.-A single mom is taking her kids to soccer practice and a middle-aged man has a job thanks to Neighbors FCU.
Both members now have cars that allow them to complete some of life's simplest tasks, tasks that had eluded them before they obtained a low-cost vehicle at an affordable rate via Neighbors FCU's "Moving Toward Self-Sufficiency" program. It is run in conjunction with Catholic Charities of Baton Rouge and makes the cars available to the underprivileged within the city.
Making A Huge Difference
"The ability to have affordable transportation as a family or individual makes a huge difference in their lives," said COO Steve Webb. "For example, a member was able to keep his job after he lost his carpool arrangement. Today that member has even advanced within his company. Those are the kinds of stories we are hearing from the people we are helping."
Over the last four years the credit union and Catholic Charities have helped 60 members get two-year-old cars priced from around $11,000 with 9.75% financing. The cars come with about $2,000 in support from the credit union and Catholic Charities that goes toward a downpayment and to cover the first three monthly payments, which generally run about $250.
"There is no way most of these members could afford a car without this program," Webb explained. "We do not risk-price the credit-most of it is D and F. If we did, these members would pay over 16%, and much higher if they went somewhere else."
The cars are purchased form Enterprise Car Sales, which cuts $500 off the price for the $440-million CU's program. The cash assistance given to the members comes from the Catholic Charities and through various foundations, including the National CU Foundation, which has donated $50,000.
NFCU has made 60 of the loans and Webb said the portfolio is performing very well, with only one default. The COO believes the program is working because members who receive assistance understand that if they fail to live up to their commitment to pay, the program could be terminated. "They know that not only are they helping themselves, but many others in the community who need this important service."
Webb has kept Moving Toward Self-Sufficiency "under the radar" and does not advertise it because he knows demand would be too great for the credit union to meet. Catholic Charities, which falls within the credit union's field of membership, brings potential candidates to NFCU. "Before we complete the loan these members go through financial counseling. Most of the time, this is the first financial relationship these members have."
No Risk To The Credit Union
With a $250-million overall loan portfolio, Moving Toward Self-Sufficiency does not present any risk to the credit union, according to Webb. "It's just a blip on the radar."
The program was originally started to help individuals displaced by Hurricane Katrina. Many people had moved to Baton Rouge only to find that the city's public transportation system could not meet their needs. Catholic Charities began offering assistance itself, buying low-cost vehicles for people. "But they soon found that was a waste of their funds since the cars they bought were not dependable and broke down," Webb said.
