In rural parts of central Oregon, it is tough for poor people to get jobs in bigger towns such as Bend or Redmond if they do not have cars to get to work.
So executives at Community First Bank in Prineville joined forces with a Redmond nonprofit to offer low-interest used-car loans for low-income workers. The Prineville Bancorp. unit has made its first loan under the Opportunity Cars for Work program, administered by the Partnership to End Poverty.
"This will help people who are below the poverty line improve themselves through better jobs, which should also help improve the employment base" in the region's small cities "and ultimately the communities themselves," said Robin B. Freeman, the $197 million-asset bank's chief executive officer.
Nicki Mehta, the director of the Cars for Work program, said more community nonprofits across the country are obtaining cars for low-income workers, usually using vehicles provided by charities such as The Salvation Army.
The Oregon program was modeled after a nonprofit in Lebanon, N.H., Car Loans and Counseling, which works with Chittenden Bank in Burlington, Vt., Ocean Bank in Portsmouth, N.H. (both units of the $6 billion-asset Chittenden Corp. in Burlington), and the $521 million-asset Northeast Credit Union in Portsmouth to offer "the working poor" low-cost car loans.
"We want to break people out of the cycle of poverty by not only enhancing their mobility to get better-paying positions, but also by increasing their financial self-sufficiency" by having them take out and repay the car loans, Ms. Mehta said.
The Oregon program's clients also take financial literacy classes taught by another nonprofit, NeighborImpact in Redmond.
"This gives people an opportunity to start over with the skills needed to budget and save — because if they don't work on a budget, they won't be able to meet their goals," said Tamera Bishop, who teaches the classes.
Ms. Mehta said the program also provides basic car maintenance classes and safe driving courses.
Community First also gave the Partnership to End Poverty a $3,000 grant to help fund the program. The nonprofit guarantees loan repayment in case of customer default, and it has negotiated with local dealers to lower their markups for cars sold under the program, to 2% to 15% over the wholesale price, Ms. Mehta said.
Typically, local dealer markups are 15% to 20%, she said.
The program is being targeted initially to people living in or near Prineville, a small town about 20 miles east of Redmond, and Ms. Mehta said her goal is to extend loans for used cars to about 25 local residents. She plans to expand the program eventually to include residents of other rural communities in central Oregon.
Mr. Freeman said that so far Community First has made one loan for a used car at 7% interest to a single mother who recently landed a job in Redmond.
"This program gives people the opportunity to build their credit, which gives us the opportunity to offer other bank products," Mr. Freeman said.
Community First also expects to obtain Community Reinvestment Act credit under the community investment category for participating in the program, he said.
