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New Video Released on Non-Prime Auto Lending
Wednesday, June 22, 2016 6:30 AM

See How Loans Are Opportunities for Credit Unions and Consumers

The National Credit Union Foundation has released a new video to showcase its Non-Prime Auto Lending Program. The Foundation, in partnership with the Filene Research Institute, is working to assist low- and moderate-income consumers with its product incubator for Non-Prime Auto Loans.

The 18-month pilot program recently closed, with 10 credit unions participating across the country. The video is comprised of two in-depth member testimonials and provides an overview of this type of lending from University FCU in Austin, Texas, one of the pilot participants.

The Foundation recently released an implementation guide and feasibility study report to help credit unions interested in offering these types of auto loans.

“Non-prime auto lending is a great example of what many refer to as ‘doing well by doing good,’” said Lois Kitsch, Foundation national program director. “These types of loans are proven to be both good for the member and for the credit union.”

During the Foundation's pilot, more than $102 million was loaned to borrowers with an average interest rate of 11.47 percent. More than 7,605 loans were closed. Considering the average borrower credit score of 581, the rates are lower than what most consumers would have received elsewhere.

Non-prime refers to the practice of making loans to borrowers with weak or no credit histories or limited payment capacity. Research shows there is a tremendous opportunity for credit unions to reach out to this market that has been disserved by predatory lenders and under-served by traditional lenders.

Video by Andy Janning, NO NET Solutions

About the National Credit Union Foundation (ncuf.coop):
The National Credit Union Foundation is the charitable arm of the U.S. credit union movement and works as a catalyst to improve people’s financial lives through credit unions. Through Foundation grants and programs, credit unions provide widespread financial education, create greater access to affordable financial services, and empower more consumers to save, build assets, and own homes. Donations to the Foundation enable credit unions to help their members reach life-changing goals and achieve financial freedom. The National Credit Union Foundation is a 501(c)(3) tax-exempt charitable organization. The Foundation continues to earn the Better Business Bureau seal of approval as an “Accredited Charity” for meeting all 20 BBB Wise Giving Alliance Standards for national charities.