CALCOE Federal Credit Union’s Non-Prime Auto Loans Put Members on Road to a Better Future

Reliable transportation is often the key for low-income families seeking access to jobs, housing, schools and health care. But when these families turn to payday loans, pawn shops and check-cashing facilities to meet their financial needs, the high fees they encounter often trap them in a cycle of debt – and put reliable transportation out of reach.

CALCOE Federal Credit Union is working to change that.

In a partnership with the National Credit Union Foundation and the Filene Research Institute, CALCOE is piloting two new products that it hopes will promote thrift and provide greater access to credit. One will offer affordable auto loans to credit-challenged consumers; the other will reward borrowers who make payments on time with rates that can go even lower.

“We’re calling them Credit Builder loans for a reason,” says CALCOE Marketing Director Ryanne Nesary. “We believe that by offering an affordable interest rate, we can help borrowers build credit and improve their lives.”

Fourteen credit unions across the country are testing the Non-Prime Auto Lending program, which is one of five products in a Filene accessible financial services incubator being funded by a grant from the Ford Foundation.

CALCOE is combining the auto lending program, which is designed to help lenders fairly price and manage non-prime auto loans, with another Filene product called LIFT (for Lower Interest For Timeliness) that gives borrowers a chance to earn their way to more affordable credit by making on-time payments for 18 months.

“These programs provide us an opportunity for membership growth and sustainability,” says CALCOE President/CEO Leslie M. Johnson. “They also give us an opportunity to build community relations with other nonprofit groups and show our passion for helping people. We succeed with a business plan for continued growth, and our members succeed by improving their lives.”

Providing affordable alternatives for those members is important, Nesary says — especially in the Yakima Valley, where 45 percent of families have an annual household income of $35,000 or less and where close to 50 percent of the population has subprime credit.

“Many of the buy-here-pay-here car dealers, who cater to borrowers with imperfect or no credit history, charge anywhere from 20 percent to 33 percent APR,” Nesary says. “CALCOE’s interest rates are capped at 18 percent APR, which makes a huge difference for someone who just needs a reliable vehicle to get back and forth from work to home.”

How big a difference?

“Estimates say that families can increase their income by as much as 25 percent with access to reliable transportation,” says NCUF Executive Director Gigi Hyland. “We’re excited to work not only with Filene on this project but also with such a wide array of credit unions across the country to give affordable, safe and reliable used cars to those that need them most.”

CALCOE launched its Credit Builder program in May 2013 and then joined the NCUF-Filene incubator initiative in December to share its experiences and learn from other credit unions. “We are excited that more than 140 loans have been signed since our program’s inception,” Nesary says.

The program is being marketed through “local and reputable car dealers,” Nesary says. CALCOE also is working with the Yakima County Asset Building Coalition — a nonprofit organization that partners with financial institutions to provide low-cost financial services — and with Bank On Yakima County to spread the word.

“Credit unions have a long history of being the proving ground for consumer-centric, innovative financial products,” said Cynthia Campbell, director of innovation labs at Filene. “Partnering with the NCUF to test the viability of Non-Prime Auto Loans with mainstream financial institutions was a natural fit, since their experience in working with low-to-moderate income consumers is extensive.”

Questions about this story? Contact Gary M. Stein: 503.350.2216,

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