The Opportunity

Owning a car is a necessity for many low-income households in rural North Carolina.  Public transportation options in rural areas are limited, so most rural wage earners must own a personal vehicle to gain access to jobs, stores, and education and childcare facilities. This has important implications for asset-building, because the working poor typically pay a higher percentage of their income on transportation than other workers, with transportation expenses taking up more than 20% of household income.[1]   

Low-income vehicle ownership programs have focused on the financial aspects of vehicle ownership and its potential effect on a household’s financial asset-building. Evaluations of these car ownership programs have found that they tend to improve the ability of participants to get to their jobs, increase their wages, improve their overall financial situation, and change spending and saving patterns.[2] Reliable vehicle access improves their access to health care, nutritious food, educational opportunities, and day care options, and also increases community involvement.[3]            

How the Tactic Is Applied

Combine Car Purchases with Financial Counseling and Other Support Services

(Wisconsin)West Central Wisconsin Community Action Agency, Inc.’s JumpStart/ Ideal Auto
More Than Wheels (New Hampshire)

Started in 1999, West Central Wisconsin Community Action Agency, Inc.’s (West CAP) JumpStart/Ideal Auto program serves a rural seven-county region in West Central Wisconsin.  The program assists low-income rural residents with purchasing late-model, warranted vehicles that meet efficiency and safety standards set by the agency.  West CAP’s “Jumpstart” program has three related components: 1) identifying and providing financial support programs for clients; 2) developing financing partnerships with local financial institutions; and 3) an in-house automobile dealership, called Ideal Auto.  Eligible households must have children, earn less than 200% of the Federal Poverty Level, meet agency credit standards, and maintain a steady income stream.[4]

West CAP staff members work with each client household to evaluate transportation and other needs and to assess the household’s budget and credit worthiness.[5]  Partnerships with area credit unions enable participants to purchase vehicles with five year loans at favorable interest rates.[6]  Participants also receive a $1,500 down payment assistance grant provided by West CAP.  Finally, as a licensed automobile dealer, West CAP purchases vehicles that meet the program’s standards directly from wholesale auctions and passes its savings on to its clients. 

West CAP uses the car-buying program as an opportunity to engage households in financial education and counseling. Throughout the car buying process, West CAP provides services such as reviewing credit history, repairing credit history, purchasing car insurance, and developing a budget to account for car maintenance requirements.[7] As part of the monthly payments participants make on their vehicle loan, West CAP requires them to place $20 per month, for a total of $1,200 over the loan period, in a “Personal Repair Fund Account” that is to be used only for minor repairs to the vehicle.[8]

In a similar vein to the West CAP JumpStart program, More Than Wheels (formerly Bonnie CLAC) is a nonprofit organization that uses the car buying experience as an opportunity to offer car purchase counseling as well as general financial education and credit repair services.

On the Internet

West CAP JumpStart Program
http://www.westcap.org/jumpstart.htm

More Than Wheels
http://www.morethanwheels.org/