The Filene Research Institute is gearing up to test the National Credit Union Foundation’s auto loan program for low-income borrowers, according to a recent article from the Credit Union Times. The program rewards consumers for on-time payments, rather than penalizing them for late payments.
Testing of NCUF’s product will begin in January 2014 and last 18 months. Filene’s financial services incubator will evaluate how well NCUF’s product works to provide loan accessibility. The incubator was started in August with a $700,000 grant from the Ford Foundation.
Cynthia Campbell, Filene’s director of innovation labs, told Credit Union Times that the program was picked for testing from more than 20 submissions.
I’d say the right time to get in. But I’m ever the optimist, Mike. 🙂
Just wondering about this: Does anyone have thoughts on the success of programs to reward borrowers for on-time payments. It seems like whatever the reward would be — a lower interest rate, small discount on the monthly payment, or something similar — would do little to keep a subprime borrower from defaulting. I suppose it could engender some loyalty, but I’m not sure how much that would matter if the borrower lacks the funds to make payments.