Page 15 - Michigan Credit Union League: CU Impact Report

FALL 2020 CREDIT UNION IMPACT REPORT 15

BUILDING SUCCESS WITH

NO-CREDIT/LOW-CREDIT

BORROWERS

One Detroit Credit Union’s First-Time Auto continued McDad. “The Center for Working Families
Loan program is helping no-credit/low-credit is able to help those who need a little extra support
Detroiters with essential travel needs. in navigating the terms of their loan and balancing
their personal budget. They have been essential to
the program’s success.”
In the Motor City, access to a reliable vehicle is a
critical need. Public transit, particularly between the “The One Detroit Credit Union First-Time Auto Loan
city and suburbs, is lacking and leaves most residents is an innovative product that meets a real need in
in need of a car to get to work. However, some our community,” said United Way for Southeastern
citizens in need of automobiles don’t have the credit Michigan Director of Economic Mobility Initiatives
score many lenders require, thereby saddling first- Megan Thibos. “Reliable transportation is critical
time buyers with unaffordably high interest rates, if to maintaining employment and family economic
not denied altogether. security.”
That’s why One Detroit Credit Union created the According to Thibos, before this product was
First-Time Auto Loans program, designed to help introduced, United Way’s clients often had little
improve mobility and, subsequently, employment choice but to gamble on buying an aging vehicle
in Detroit. Within the program’s first 100 days, they of questionable reliability. This was usually done by
helped 27 members and funded $370,657 in auto entering into an exploitative loan contract with a low-
loans for first-time buyers. end car dealership or by scraping together enough
cash to buy the lowest-cost vehicle they could find.
“Many Detroiters who have a hard time financing a
vehicle end up turning to a predatory auto lender “This program is helping low-income families access
whose interest rates are double and triple that of a needed financing at an affordable cost so that they
mainstream financial institution,” said One Detroit can purchase a reliable used vehicle. It has been a
Chief Strategy & Innovation Officer Joumana McDad. pleasure to work with the team to develop the product
“This leads to devastating cycles of inescapable debt with the needs of our clients in mind,” said Thibos.
and financial isolation. If we can help them have
a successful experience with their first loan, it’s
setting them up for a future with strong credit and
empowering them to control their financial destinies.”

Among the program’s features are no required co-
signer, an 8.99% APR regardless of credit score and a
90-day employment record. These are all put in place
to make the loans both accessible and successful in
the long term.
On top of that, One Detroit has partnered with
United Way’s Center for Working Families to offer
life coaching services to help members stay on track
with loan payments.

“Our partnership with the United Way provided
critically needed financial literacy support for
members who are obtaining their very first loan,”