Sometimes, all you need is a little push.
Besides housing, the biggest drain on finances for many working poor and middle-class folks is an aging car. The nickel-and-diming a junker demands will bust any budget. And random breakdowns can sabotage efforts to hold down a regular job. Lots of people got into more car than they could afford, back when they were practically giving away loans.
A program in New Hampshire is trying to change that, one vehicle at a time. Bonnie Car Loans and counseling, known as Bonnie CLAC, is loosely modeled after Fannie Mae (under its original mandate). Its aims to help low- to moderate-income workers take charge of their finances with the ultimate goal of buying a new car. The program acts as the middleman in the transaction and negotiates with car dealerships and banks for discount rates. It also guarantees the loan.
It also charges a $65 sign-up fee and an $800 consulting fee, that is rolled into any resulting car loan. Hmm.
According to a study released last year by the National Economic Development and Law Center, there are perhaps 151 programs across the country that work at getting low-income workers into their own cars. Some fix up older, donated cars, while other programs help people get loans. Bonnie CLAC tries to get people into new cars, unless they can only afford a used vehicle.
I don't know that it's necessary for anyone to buy a new car, especially since they depreciate the moment they're driven off the lot. If the point of the program is to put low-income workers into reliable cars, there are many with excellent longevity (I'm thinking Toyotas, Hondas and Volvos in particular) that can be bought a few years used for thousands less.
But the program, which has helped some 1,000 people in its 7 years of existence, seems to be working. It's expanded to nine offices in New Hampshire, and hopes eventually to grow nationwide.
The power of reliable wheels can change lives. "Many of (our clients) have gone on to get better jobs, many of them felt stable and they were saving for houses, their credit went up, and it was amazing," founder Robert Chambers said.
Get rolling: New Hampshire program helps working poor buy cars