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The program is designed for those who need assistance to afford a reliable car.
JOEL HAWKSLEY | The Roanoke Times
Paula Jones of Vinton recently purchased her red Nissan Cube through an innovative program at Freedom First, which will help her rebuild her credit record.
Wednesday, April 3, 2013
Paula Jones is driving her little red car to a better credit rating.
She’s doing it through an innovative package of classes, credit counseling — and a kind of old-fashioned country banker’s approach to lending money that says a borrower’s good attitude and hard work can mean more than a credit score.
It’s a program, called Responsible Rides, that Freedom First Federal Credit Union, Enterprise Rent-a-Car, New River Community Action and Total Action for Progress hope can address a major challenge in the area: It’s tough to make a decent living if you don’t have the wheels to get to work.
“They just opened a door I didn’t know was there,” said Jones, who makes ends meet with a full-time evening shift nursing job at Richfield Retirement Community, while getting up early most mornings to take care of an elderly man and woman in the Hollins area.
She’s been struggling to get her finances in order after several years of caring for her aging parents before their deaths last year.
Much of the problem, she admits, was her own fault. She let herself get behind on her own bills, trying to keep after those of her parents . Unpaid medical bills from a hospital stay for debilitating back spasms that kept her bedbound were the last straw.
But instead of giving up and letting the mess get even worse, Jones decided to ask Tim Cerebe, manager of Freedom First’s Vinton branch, for advice.
And he directed her straight to Responsible Rides.
There, she spent hours with program coordinator Tomeka Akerson, going over her finances — as Akerson listened carefully, trying to gauge how serious Jones was about working to fix her credit.
After that came a long afternoon of classes on basic car care — everything from when an air filter needs changing to the sound brakes make when the pads are wearing out. There was an equally long basic seminar on budgeting and saving and the way credit scores work.
Then, the fun part. After some ogling of cars online, Jones and Akerson headed down to Enterprise’s used car lot on Melrose Avenue, where they found the red Nissan Cube Jones decided to buy.
“I think it looks arty,” she said.
But as with the more than 130 people who have been able to borrow money to buy a reliable used car through the Responsible Rides program, the deal involves more than a car purchase.
For some, like Tonya Dungee, it has meant freedom from worrying about brakes that regularly gave way as she made her rounds at the scattered Roanoke Valley apartments where she is property manager. It’s meant the kids on husband Reginald’s seventh grade basketball team can get rides to games.
Retirees Augustine and Christine Vergies had to rely on family and friends to take them shopping and to doctors appointments. Their fixed income wasn’t enough for an ordinary bank loan.
More than half the people participating in the Responsible Rides program are single parents, many of them juggling getting to work, getting to the grocery store and getting kids to and from school and day care safely while relying on the bus or on aging cars that don’t always start when you turn the key, said Dave Prosser, vice president of community development at Freedom First.
Many struggle. Their average income is $17,550. Roughly a third don’t have any credit history at all. For those who do, the average score is just 580, which is considered poor. Most lenders won’t touch them. Those who have had cars tend to have real junkers financed at double digit interest rates. Freedom First’s maximum rate is 9.9 percent, and some people qualify for lower ones.
For all, a car is critical.
“If you can’t get to your work, how are you going to work?” Prosser said.
For Jones, a $14,000 loan through the program is helping pay off those medical bills that piled up after her mother’s death, as well as financing her car. Some $1,500 of the money goes to what’s called a borrow and save account — it basically works like a secured credit card, allowing people to finance purchases up to the amount of what they have on deposit with a financial institution. Prosser said it’s an alternative to high interest rate payday loans, and encourages saving.
Responsible Rides, though, isn’t a charity, Prosser said. It is a business that makes money for Freedom First, in the way banks used to earn money: lending to people who work hard and can be trusted to repay their debt.
Key to the process is sitting face to face with a would-be borrower and getting a sense of how serious they are about making a budget, sticking to it and honoring their commitment to repay their loan.
“I knew almost from when we first started talking that Ms. Jones was going to be fine,” Akerson said.
The process works, too. Fewer than one half of 1 percent ever miss payment due dates. In contrast, 1.4 percent of Bank of America’s car loans are past due, according to its latest report to the Federal Financial Institutions Examination Council.
For Jones, there’s one more benefit, beyond the support in rebuilding her credit and a new red car. She’d never actually bought a car and arranged financing herself — her late husband Frankie had handled that.
“I did this myself,” she said. “I trusted in God and we found a way.”
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