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Author Topic: Car loans help the poor get to work  (Read 3052 times)
SLCPUNK
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« on: October 12, 2006, 01:28:30 PM »



By ELLEN SIMON, AP Business Writer Thu Oct 12, 5:42 AM ET

Emma "Matty" Yturralde was the exact opposite of a bank's dream borrower: A newly divorced single mom with a $13-an-hour job. Her finances were so tight, she had a tenant sleeping in her living room.

She had a car, but it was in the shop almost as often as it was on the road. The bus ride to her job at Kmart took an hour and a half. Too proud to ask for a ride home, Yturralde, now 49, said she would sometimes wait outside the store to see if a co-worker offered one.

Her life changed in 2003 with a $2,000 grant for a car and a $4,000 auto loan at 4 percent interest through a nonprofit program called Ways to Work, which enabled her to buy a 2001 Daewoo. The store where she worked closed a few months later, but she was able to drive to a new job at a store farther away.

"If I didn't get the loan at just that time, I don't know what would have happened to me," she said. "Maybe I would have lost my job, maybe I would have gone on welfare or worse."

Advocates say Ways to Work, which has underwritten $36 million in loans to 24,000 families since it began as a small program in Minnesota in 1984, is part of a new model for social service programs, one that delivers human services aimed at economic self-sufficiency. Borrowers in the program, which is in place at about 50 human services organizations in 25 states, are low-wage workers who either have poor credit or no credit. The program is targeted at getting them not just a car, but also a decent credit score and a bank account.

The nonprofit, which has grown swiftly and hopes to quadruple the number of loans it makes over the next five to six years, has a repayment rate of 90 percent. The program grew nationally with early funding from The McKnight Foundation and loan capital from Bank of America Corp.

Most of the loans are two-year loans for up to $4,000, with interest rates capped at 8 percent and monthly payments capped at $182.

Without loans through the program, its clients could pay 24 to 28 percent interest elsewhere, said Jeff Faulkner, president of Ways to Work.

"We commonly refinance loans where the APR (annual percentage rate), including fees, is 35 to 50 percent," he said.

A study Ways to Work commissioned, released Thursday, found its borrowers reported take-home pay increases averaging 41 percent, with their average annual income growing to $15,312 from $11,904. More than half the recipients said they were able to get better jobs because of their cars. Nearly four out of five parents with young children said they were able to put them into a more satisfactory daycare arrangement.

The program works like this: Local social service agencies that decide to offer it can get a support package from the national Ways to Work organization. Local agencies use money from the national program to make a collateral payments to local banks, which make the loans. The money for the collateral comes from foundation grants, Bank of America loan capital and Federal transportation funds.

Family Services of Western Pennsylvania, a Pittsburgh-based social services agency, has expanded its Ways to Work program from loans for 18 cars in 2000 to loans for 86 cars in 2005. It is now the largest Ways to Work program in the country.

Family Services' most recent annual review of the program, completed in 2005, found that 85 percent of loan recipients were able to increase their salaries and 70 percent improved their credit rating.

"In the old steel industry, jobs were along the river in the cities," said Donald H. Goughler, CEO of the agency, which is based in Pittsburgh. "Now, most of the jobs are found in the suburbs. New jobs are more accessible because of this program."

People who worked with Family Service Agency of San Mateo County in California to get the car loans say the amount of work they miss after getting a car is down 92 percent. Their transit time to work is cut by 91 percent and more than one-quarter say they have been able to attend job-related education they couldn't have reached without a car.

The local agencies that make the loans carefully vet recipients, who have to write a personal statement about their situation. The underwriting process can take anywhere from two to five weeks.

Only low-wage earners with at least one dependent child are eligible. In 2005, roughly 13,000 people received a loan application though the program. About 5,500 completed the application, but only 2,500 were approved for a loan. Of that group, about 2,000 took the loan they were approved for.

"That's clearly creaming, and it's also self-selection, but it's really important both for the program and the people we actually serve that we give the loans to people who are most likely to succeed," Faulkner said. "We don't want to make their credit worse than it already is."

Agencies insist the borrower find a roadworthy, reliable car that will last for the life of the loan. Some agencies work with local mechanics or used car dealers to find cars in the borrowers' price range. Yturralde's case worker at Family Service Agency of San Mateo County rejected all the cars she found. Her loan was within days of expiring when a local dealer called and said he had a dependable car in her price range.

Loan recipients must construct a family budget, working with a counselor who tells them whether they're eligible for food stamps or child care reimbursement and encourages them to cut out expenses such as mobile phones and cable television.

David Turner, a 36-year-old single father in Pittsburgh, said the 1997 Dodge Intrepid he bought with a Ways to Work loan from the Western Pennsylvania agency has changed what was a two-hour, three-bus journey to drop his two daughters off at school and daycare before work into a half-hour trip.

Turner, who started a new job doing remodeling work about seven months ago, said, "It's the first reliable car I've had in a long time.... I don't have to worry about huge time in travel with the girls; I'm able to get to work on time and handle my responsibilities."

Emma 'Matty' Yturralde, right, and daughter Samantha Yturralde pose with their 2001 Daewoo Lanus, purchased with help from a Ways to Work loan, on Wednesday, Oct. 11, 2006, in Antioch, Calif. Yturralde, 49, a single mother who works at Kmart, a $4,000 car loan was the key to a new life, cutting her commute to work from an hour-and-a-half each way to 10 minutes. (AP Photo/Noah Berger)
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Surfrider
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« Reply #1 on: October 12, 2006, 02:19:46 PM »

What a great program and way to raise the poor.
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SLCPUNK
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« Reply #2 on: October 12, 2006, 02:53:09 PM »

What a great program and way to raise the poor.

It is a nice change from the companies who bottom feed and charge the 30% and higher interest rates to this group.
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Surfrider
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« Reply #3 on: October 12, 2006, 03:00:22 PM »

What a great program and way to raise the poor.

It is a nice change from the companies who bottom feed and charge the 30% and higher interest rates to this group.
I agree.  On the one hand, I understand that they charge high interest rates because of the likelihood of default.  However, many companies target the poor and allow them to enter into these unconscionable contracts. 
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smithandheston
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« Reply #4 on: October 17, 2006, 12:12:48 AM »

The real joke here is the myth that the "poor" in this country actually work
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SLCPUNK
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« Reply #5 on: October 17, 2006, 12:56:50 AM »

The real joke here is the myth that the "poor" in this country actually work

Please elaborate.
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SLCPUNK
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« Reply #6 on: October 17, 2006, 01:01:26 AM »

What a great program and way to raise the poor.

It is a nice change from the companies who bottom feed and charge the 30% and higher interest rates to this group.
I agree.  On the one hand, I understand that they charge high interest rates because of the likelihood of default.  However, many companies target the poor and allow them to enter into these unconscionable contracts. 

I think I read that the default is about 30 percent or so. Which means the rest pay the charge offs.

 I understand both sides. Usually the dealer is going to get their money back on the downpayment anyway with cars like that. They'll pay 800 bucks for a car at auction. Sell the car for 4500 bucks when it is worth 3000, and then at 30 percent (or higher.) They are making a killing on these people.

At the same time, if your credit is ruined, who else is going to give you a loan? High risk equals high percentage rate. But at the same time, I still feel like these most people are really getting the screw job.

I would not feel that guilty about charging somebody with horrible credit 18 percent on a 3k car. But 38 percent? 25? 30? At what point is it really pure greed?
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smithandheston
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« Reply #7 on: October 17, 2006, 02:58:38 PM »

The real joke here is the myth that the "poor" in this country actually work

Please elaborate.

Anything for the king from SLC everyone's favorite punk.... It would be my pleasure to elaborate.

First I don't have a problem with this program persay... its giving a second chance to those who fucked their credit up on their first chance, even though it was their own fault and irresponsablity that caused their situation; second chances can be a blessing, if people learned their lesson the first time.

These people who this program is aimed at I dont see as poor, they are lower working class. They have jobs they pay bills and taxes they just have a hard time making a living in their situations. Although I do sympathise with those who work extremely hard but just cant seem to get ahead, I have little sympathy for those who troll the nation looking for nanny programs to take care of them, I'm talking the socailized medicine crowd, along with the free college for all group of squaters. I belive in helping those who truly cant help themselves but lazyness and dependance I do not.

Now on to those who can be classified as poor in this nation. This is the best, richest most efficiant nation in the world. This is the place where dreams can come true, where visionarys become legends and the smartest roll in the wealth. (I know there are freeloader trustfund bitches, but there but a tiny fraction of the sucessful). With so many opertunitys, big and small, grand and shitty there is no excuse for being a homeless bum, not in this nation, not where fourtine waits to be had.

As far as im concerned bums are scum, riden with disese, drug addicted and directionless. I DO NOT BLAME SOCIETY, THE GOVERNMENT or anyone elce but the individual. And call me crazy but i have a serious problem when these leaches live on the sidewalks my tax money maintains, use my money (public assistance) to buy drugs, keeping that industry going at its absolute roots. And no one can point to a constitutional right or phelosophy that states that people have a right to deficate on the streets.  rant

thats about it for now.... im curious what a massive liberal such as yourself belives the case is with poverty in the US, seriously in a nation where people are free to take hold of their destiny. And for the record I have seen some poverty in parts of the globe most cant even find if they wanted to that has torn my heart out for how bad they live .... because there is no chance or opertunity in say Angola..... One thing for sure when ever they do get to come stateside, they dont first look for a corner to shit in.
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« Reply #8 on: October 17, 2006, 04:01:53 PM »

The real joke here is the myth that the "poor" in this country actually work

Please elaborate.

Anything for the king from SLC everyone's favorite punk.... It would be my pleasure to elaborate.

First I don't have a problem with this program persay... its giving a second chance to those who fucked their credit up on their first chance, even though it was their own fault and irresponsablity that caused their situation; second chances can be a blessing, if people learned their lesson the first time.

These people who this program is aimed at I dont see as poor, they are lower working class. They have jobs they pay bills and taxes they just have a hard time making a living in their situations. Although I do sympathise with those who work extremely hard but just cant seem to get ahead, I have little sympathy for those who troll the nation looking for nanny programs to take care of them, I'm talking the socailized medicine crowd, along with the free college for all group of squaters. I belive in helping those who truly cant help themselves but lazyness and dependance I do not.

Now on to those who can be classified as poor in this nation. This is the best, richest most efficiant nation in the world. This is the place where dreams can come true, where visionarys become legends and the smartest roll in the wealth. (I know there are freeloader trustfund bitches, but there but a tiny fraction of the sucessful). With so many opertunitys, big and small, grand and shitty there is no excuse for being a homeless bum, not in this nation, not where fourtine waits to be had.

As far as im concerned bums are scum, riden with disese, drug addicted and directionless. I DO NOT BLAME SOCIETY, THE GOVERNMENT or anyone elce but the individual. And call me crazy but i have a serious problem when these leaches live on the sidewalks my tax money maintains, use my money (public assistance) to buy drugs, keeping that industry going at its absolute roots. And no one can point to a constitutional right or phelosophy that states that people have a right to deficate on the streets.  rant

thats about it for now.... im curious what a massive liberal such as yourself belives the case is with poverty in the US, seriously in a nation where people are free to take hold of their destiny. And for the record I have seen some poverty in parts of the globe most cant even find if they wanted to that has torn my heart out for how bad they live .... because there is no chance or opertunity in say Angola..... One thing for sure when ever they do get to come stateside, they dont first look for a corner to shit in.

Dude, one thing that I think is key to ending poverty is quality education....on that note...where the hell did you go to school!??!?! HAHAH  You're spelling is beyond bad.  That or you wrote this when you were drunk. 

I also think the minimum wage in this country is WAY too low for poor/lower working class....its been a decade since it was raised if I'm not mistaken.  Thats just wrong.
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« Reply #9 on: October 17, 2006, 05:43:08 PM »

Great article SLC.  Just goes to show that private organizations are more adept at correcting problems than the government.  All those in favor of social programs should take note of this article.
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smithandheston
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« Reply #10 on: October 17, 2006, 05:49:20 PM »

wrote it on 2 hours sleep.....

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SLCPUNK
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« Reply #11 on: October 18, 2006, 12:28:16 AM »



 im curious what a massive liberal such as yourself belives the case is with poverty in the US, seriously in a nation where people are free to take hold of their destiny.

What do you mean, "the case is with poverty"? Are you asking me how we can solve it? Or how it comes to be?
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« Reply #12 on: October 18, 2006, 02:04:56 AM »



 im curious what a massive liberal such as yourself belives the case is with poverty in the US, seriously in a nation where people are free to take hold of their destiny.

What do you mean, "the case is with poverty"? Are you asking me how we can solve it? Or how it comes to be?

Hey Smithandheston.. what the hell man?

SLC's political opinions weren't even expressed in this thread.. back off man. Why act like everything he posts is an attack on your opinion?

I think it's a good program. Thanks for posting it. Interesting read.  beer
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« Reply #13 on: October 18, 2006, 10:44:29 PM »



 im curious what a massive liberal such as yourself belives the case is with poverty in the US, seriously in a nation where people are free to take hold of their destiny.

What do you mean, "the case is with poverty"? Are you asking me how we can solve it? Or how it comes to be?

Why not both?
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