“Yasmin was referred to us from Genesis Women’s Shelter where she and her daughter, Yvette, were receiving help to escape domestic violence. One of our earliest clients, she is our second client to pay off her car note. This hard-working single mother has two degrees from the University of Mexico and is multi-lingual—as is her daughter. Today Yasmin has perfect credit and is enjoying having no car payment. In the near future though, she says that she plans to come back to On the Road Lending for a loan for a newer vehicle. Even though she could go to a conventional lender, she says she prefers to buy a car through us because she knows the important services we provide will help her continue to improve her financial circumstances.
CLICK HERE to support our clients.”
Inspired by 10 mile walk to work
We can never get enough of heartwarming stories like this one:
An Alabama teen who walked 10 miles to work was brought to tears when his co-workers surprised him with a car.
Who wouldn’t be impressed by a work ethic like Derrick Taylor’s? For more than a year, he’d wake up in the middle of the night and walk 5 miles in order to make his 4 a.m. shift at UPS. The job pays 11.90 an hour, and because the money goes towards his ailing mother, there was no way Taylor could afford a vehicle. Thankfully, his co-workers took notice, raising $1,100 to buy him a car of his own.
“The group here, we’ve got some good news for you. Everybody came together and you don’t have to walk no more. You’ve got your own ride,” co-worker JD Ward told Taylor as he presented the Jeep Cherokee to the 19-year-old in an emotional video. (Seriously, we dare you not to cry — watch the video below!)
The team also gave $300 to go towards liability insurance.
“If I could, I would go around and thank everybody one by one,” Taylor said. “This is really going to change a lot for me, so thank you again.”
DART's holiday schedule reminds us of our mission
This holiday season, we were reminded why we do what we do here at On The Road Lending. We never get tired of hearing from our clients on how having a car has led to happier lives or seeing their faces when we hand them the keys, but this special reminder came in the form of an email from DART.
The email, which we assume went out to all DART users, detailed the Christmas holiday schedule. It explained that they’d be running on an abbreviated schedule (which included one system, TRE, not running at all on Christmas Day as well as the closing of certain offices) for the holiday weekend and that people who use the public transport system should plan accordingly.
And while we appreciate the fact that DART workers had the chance to take a break and enjoy their time at home during the holidays, we can only imagine how hard this must be for those who rely on public transportation to get to and from jobs, especially those whose work retail jobs with extended holiday hours. How can they commute in a safe and efficient way if they can’t even rely on their only mode of transportation? What does planning accordingly actually mean for these people? Going to work much earlier than usual? Taking a pricey taxi or rideshare to get to their destination?
We’re working to make sure people in our community have transportation they can rely on. And the truth is that it won’t happen until they have a vehicle of their own.
“Whenever I leave a new car delivery, I wish I could find a way to share with you how moving our work is and what it means to the people we help every day. When we deliver a car, joy fills the moment because we are solving an enormous problem for people, and they are extraordinarily grateful.
Ericka was a domestic violence survivor referred to us by Genesis. She was living in a safe house and having so much difficulty without a car. To get her daughter to school each morning, she had to walk through a dangerous neighborhood to the train station. She was spending $30 a day for a driver to bring her daughter home from school since her job was too far away for her to make the commute back in time.
The day we got her car, I picked up Ericka in Oak Cliff to take her to Toyota of Richardson. Overcome with emotion, she cried all the way there. I was crying, too, knowing how happy she was and how much her life would change—immediately.
As she drove away in her car, I got in my own car and said a tearful prayer of thanks that we have been given this incredible opportunity to make a difference in people’s lives in such a practical, powerful way. Thank you for the support you have given On the Road Lending and our clients. They thank you, too.
Wishing you a magical holiday season, Michelle
CLICK HERE to help us continue this important work.”
Repo man pays off car and returns it to couple
We love that the holidays are a time to give, receive and reflect on the things we’re thankful for. So we couldn’t help but share this story that warmed our hearts this holiday season.
As a repo man in Illinois, Jim Ford had seen his share of hairy situations — he’d even been shot at while repossessing a car. But luckily, the encounters never turned him into a bitter man — because a bitter man would never pay off an elderly couple’s car he had to repossess.
Stanford and Patty Kipping had a hard time keeping up with car payments on their 1998 Buick thanks to a fixed income, high prescription costs and other bills. So Jim did everything he could to help them keep their car. And we mean everything — not only did he let them know he was taking their car so that they could remove their personal items (a courtesy he extends to most), but he also tried to work with the bank to make a deal that would allow them to keep the car.
When that didn’t work, Jim took matters into his own hands and created a GoFundMe page to raise money for the Kippings car. In one night he raised more than $3,500, which easily covered the $2,501 the bank owed on the Buick. On top of that, a friend of his fixed up the Buick by topping off the radiator, changing the oil, and fixing the headlights.
And what did Jim do with the rest of the money? He put $1,000 in an envelope and gave it to the Kippings. They called the situation “a miracle come true” and we couldn’t agree more.
“I may be getting soft in my old age but you get more done with kindness,” Jim said about how he treats people he comes in contact with through his job. That’s a mantra we hope to keep with us throughout the holidays and beyond.
Support us on the big day!
North Texas Giving Day is approaching, and we couldn’t be more excited to participate in the event. We had a great show of support last year, and we’re hoping for even more this year.
We know there are so many great nonprofits you could give to on North Texas Giving Day, so here’s why we think you should consider supporting us to help people in our community get on the road to a better car, better job, better life.
We’ve talked to countless people whose commute is three times (more in many cases) what it should be because they take public transportation. What happens when a bus is late? Or a train breaks down? When your livelihood is based on something that’s completely out of your control, there’s a chance things won’t end well.
If you have a vehicle that you drive every day to get to work, drop your kids off at school, even go to get groceries, we recommend putting yourself in the shoes of someone who doesn’t have a car. How would you get to where you need to go? How inconvenient would it be for you? How much would it affect your life?
When transportation isn’t reliable, neither is the individual in an employer’s eyes. Whether a person is late to an interview or constantly late to work (because of a missed bus, late train, etc.), it just looks bad. A car can be the difference between having a job and not having a job. It’s the difference between having the money to support the family and not having the money to support the family. The lack of reliable transportation is a big reason why perfectly capable people lose their jobs.
Imagine paying $10,000 for a car that’s worth less than half of that. It’s exactly what happens to people who buy cars through predatory auto lenders. They’re sold old cars (that have likely had multiple owners — don’t get us started on that!) at extremely high interests. And when they default on those loans, which so many do, the car dealer can just repossess the car and resell it for the same price.
It’s almost as if the lenders are preying on low-income individuals and banking on them to fail so that they can make more money.
… OK that’s exactly what’s going on. And that’s exactly why we’re here. We are that ally.
We all know the quote: “Give a man a fish and you feed him for a day. Teach a man to fish and you feed him for a lifetime.”
This is something we believe strongly in at On The Road Lending. That’s why we work with our clients for several months to build financial capability first and then arrange an affordable loan through our private-equity loan fund.
Handing off those keys doesn’t mean we say goodbye to our clients. Rather we keep the relationship going through the life of the loan. That’s five (often more) years of providing financial support and mentorship. (Plus, we really love our clients and want to make sure we continue to be a part of their lives!)
We hope these 5 reasons have helped you see more of what we do and why we do it, and we hope you’ll support us on North Texas Giving Day. Click below for a link to our page.
Get up and give on Sept. 22
In the coming weeks, you’ll see countless emails, Tweets and Facebook posts about North Texas Giving Day — September 22, 2016. Last year Communities Foundation of Texas raised $33 million on North Texas Giving Day through more than 118,000 gifts benefiting 2,020 nonprofits. We’re proud to again be a part of this community-wide effort that prompts North Texans to “Get up and give!”
To be honest, it’s hard for smaller nonprofits like On the Road Lending to compete with the Goliath agencies that have large constituencies and marketing budgets for this annual effort. But we do have something that many nonprofits don’t have—our work has far-reaching impact on a wide variety of issues.
Whatever issues are important to you, we ask you to think about the vital solution that an affordable, reliable, fuel-efficient car provides:
If you support education efforts, consider whether a low-income family can actually get their child to the better school if it takes three hours on a bus or train.
If you support job-training programs, consider whether a person can actually get to their better job if they live in a transit desert.
If you support health and hunger projects, consider how likely a person is to get good food or sufficient healthcare when the nearest grocery store or medical facility is miles away.
If you support domestic violence agencies, consider how a woman can escape a batterer if she doesn’t have a car.
If you support clean initiatives, consider the positive effect of replacing older, gas-guzzling, polluting cars with newer, fuel-efficient models.
These examples are not theoretical. With your support, On the Road Lending clients and their children will have better cars, better jobs and better lives.
On the Road Lending partners with many of the organizations you care about most. When you make your gift to the organizations you believe are making a difference in North Texas, think about how a better car and an affordable loan can help the people those organizations serve.
Chances are those agencies have already asked for our help because lack of transportation is a major barrier to their clients’ success.
On North Texas Giving Day, when you donate to the nonprofits you regularly support, please also consider a gift to On the Road Lending to make their work even more meaningful.
5 things that stood out
On Sunday August 14, something awesome happened. On his show Last Week Tonight, John Oliver took on the auto-lending industry … hard. If you’ve ever wanted raw and honest insight into why we do what we do, look no further. Oliver really nails it, standing up for those whose voices need to to be heard and whose stories are all too common.
We can’t stop thinking about this awesome piece, so we thought we’d share 5 things that stood out to us while we watched.
1. Most Americans need cars OK, this is something we knew already. Not every city is equipped with a top-notch public transportation system. We see so many instances where a commute that should take less than 30 minutes takes hours because of sub-par public transportation options. Look no further than the recent Dallas Morning News article on Ms. Burch, whose commute to and from work is no longer 4 hours thanks to her new-to-her car.
2. Lenders target Individuals with poor credit Think about some of the commercials you see on TV for used cars, or even pay-day loans. Who are they talking to? They talk of no credit, poor credit, bankruptcy. That way they can hike up the interest rates. They act like they’re doing the buyer a favor. But in reality, they’re making money (and lots of it) off the buyer whether or not they can keep the payments up.
3. One car can have many owners Oliver cited a 2011 Los Angeles Times article, which investigated the journey of a 2003 Kia. They found that in three years, the car was owned by eight different people. On top of that, every time the car was resold, it was sold at a “price double or even triple its Blue Book value.” This leads us to the next point…
4. Defaulting: Bad for the buyer, good for the lender Defaulting means a car can be repossessed (or even turned off) at any time since the lender has total control of the vehicle. It’s obviously an awful thing for individuals and families who rely on cars for their livelihood. But, like we said before, all lenders have to do is get the car back and re-sell it. That means a new down payment, a higher-priced car and those same high interest rates. Defaulting means more money for the lender.
5. “…when you are poor, everything can be more expensive” This was a line in the piece that really stood out to us because of how true it really is. The idea of taking advantage of those among us who cannot afford it breaks our hearts. High interest rates means someone could end up paying more than $10,000 on a car that’s worth about half of that. In what world does that make sense? Not in ours, and that’s why we’re trying to change things.
If you have a little time, we encourage you to check out John Oliver’s piece on the auto-lending industry. He has some choice words in it (it is on HBO, after all), but like we said before it’s honest and raw. And as Newsweek said, “John Oliver is at his best when he is exposing industries that take advantage of lower-income Americans.” View the video below.
Los Angeles Times A vicious cycle in the used car business
Fatal crash involving Tesla in autopilot
Not too long ago we wrote a post on the innovative idea of self-driving cars. We were cautiously inquisitive about a future where cars drive themselves, asking questions like, “If we have a split second to decide between hitting a person or animal in our path with swerving off the road and into a tree, how does a driverless car make that decision?” There are decisions that are hard (if not impossible) for us to make as drivers, so how can we expect a computer to make them?
It turns out we were right to be concerned. On May 7, there was a fatal crash in Florida between a Tesla in autopilot and a tractor trailer. Joshua Brown, an entrepreneur from Ohio, was killed when the Tesla failed to apply brakes to allow the tractor trailer to make a left turn.
Currently the National Transportation Safety Board and the National Highway Traffic Safety Administration are both investigating the incident and trying to get to the bottom of why this happened. “Neither Autopilot nor the driver noticed the white side of the tractor-trailer against a brightly lit sky, so the brake was not applied,” Tesla said in a statement released recently.
On top of all of this, Tesla is looking into a more recent crash that took place in July in Pennsylvania that may have also been a result of the autopilot feature. (Tesla says there’s no evidence that points to autopilot, but the police contend that the driver said the car was in autopilot.)
Our concern here is that since Tesla has put the autopilot feature in all of its cars, there’s no real way to test it out in a controlled environment. Instead of testing in private, like most other companies, they’re testing with the public. And while autopilot is disabled in all the cars — drivers who want to use autopilot must first enable it and check a box saying they’ll “maintain control and responsibility” of the vehicle — we can’t help but feel like this is a dangerous way to beta test a product. It’s not like a new iPhone app, people’s lives are at stake here.
What are your thoughts on the technology of self-driving vehicles? We know it’s inevitable, but should it be tested privately first before it goes public?
Texas plans to link the two this winter
The Texas Attorney General’s Office has come up with a new way to penalize those late on child support payments. Starting this winter, they’ll be pursuing an initiative that will block vehicle registration renewals for parents who are behind on payments. This will be in effect for Texans who are six or more months late on child support starting with December registration renewals.
And because the Texas Attorney General’s Office has the power to institute this initiative without corresponding legislation, they can legally revoke registrations without due process. Adding this to the fact that the office is already able to revoke driver’s licenses (professional and recreational licenses, too), we can’t help but wonder if this is an idea that only looks good on paper.
We believe that child support payments need to be paid for the sake of the children. But doesn’t taking away transportation to a job create a larger roadblock to turning in payments? There are countless reasons why child support goes unpaid for six months or more. One of the more common reasons? Because the parent can’t afford to pay, not because the parent is purposely refusing to pay or avoiding it.
Another concern is that the initiative will only apply to vehicle registration renewals. This means that it won’t be enforced on new vehicle registrations and might mean the initiative will disproportionately affect lower income populations.
In our opinion, this is an initiative with good intentions and potentially rough consequences for people who are already in unfortunate circumstances.
What do you think about revoking registration renewals for people behind on child support payments — good idea or bad idea?
How well does industry disruption serve the consumer?
Financial technology companies, so-called “FINTECH,” have received a lot of venture capital funding in recent years. One area that has been of particular interest is that of peer-to-peer lending, whereby companies, such as Lending Club and Prosper, connect investors (lenders) with consumers (borrowers) to facilitate loans on-line. These companies function as financial intermediaries, as an alternative to banks, credit unions, and other financial services companies. Because they offered high returns, the companies grew quite large. Marketplace lending grew by 700% in the past four years. But both companies have faced significant recent challenges, including loan losses, that have dropped their volume and value, leading some to question the business model.
The model is a bit complicated, involving many entities, including a traditional bank and several intermediaries. Consumers apply on-line and are assigned a risk rating based on their credit scores, debt-to-income ratios, and other inputs. The borrower’s loan is put on-line through these platforms and made available for individual investors to select and they are paid a return, commensurate with the risk. In theory, this marketplace enables an individual borrower to connect with an individual lender. The practice, however, has drawn much more large-scale institutional capital, than small investors. The majority of these loans are personal, unsecured credit. Contrary to the name, peer-to-peer, there are a number of entities involved in each transaction, all of which take some form of fees that provide their revenue, so borrowing costs are actually fairly high in comparison to traditional loans. As with payday loans and subprime auto loans, marketplace lending tends to attract less creditworthy borrowers, who typically use traditional financial products.
Half of Lending Club’s stock value was erased last month when founder and CEO, Renauld Laplanche, was recently fired for falsifying loan data. In a consumer lending business, transparency and accountability are critical to maintaining confidence. Shareholders do not like news like this. Lending Club has also suffered from an influx of competition, including Prosper.
Prosper’s problems are not malfeasance, but a struggle to find investors to buy their loans. Their investor demand has dropped significantly in the past two quarters and they have been forced to lay off 28% of their employees.
While capital markets are strongly attracted to companies that are “industry disruptors,” particularly those with a technology platform, these companies’ troubles raise concerns about whether innovation really works all that well for the consumer or the shareholder. Default rates for these products have been fairly high, with industry losses of over $34 million last year. The reality is that it is expensive and time-consuming to assess borrower quality in the optimal way – using character-based lending and other tools besides just formulaic risk scoring models. Bringing borrowers and lenders (investors) together can work very well in an organization like On the Road Lending. Ironically, in peer-to-peer lending, the distance between the two gets fairly large.
Can we regulate our way out?
Ask most financially sophisticated people and they will tell you that payday lending is predatory and morally wrong. These products are designed to provide immediate cash to a person who has no other options, thus taking advantage of a desperate situation. Relief of an urgent need is the entire driver of the business model. Regrettably, nearly half of all Americans are likely purchasers of these products and services. The Atlantic Magazine ran a recent cover article called “The Shame of the Middle Class” that says that 47% of Americans could not access $400 if they needed it in case of emergency. This is a crisis for our country and we all, collectively, have a moral obligation to restructure our complex economy to incentivize greater financial security for our citizens.
If you talk with users of these non-traditional financial systems, however, you may get a different perspective. For many low-income people, use of payday lenders is an unfortunate reality and it is not uncommon to hear them say they don’t want the services to go away because they have nowhere else to turn. They often understand that these services are taking advantage of them and they may feel ashamed at having to use them, but there is no other option.
The Consumer Finance Protection Bureau is taking aim at this industry. Their proposed new rules would require a radical change in how payday lenders operate by requiring these companies to underwrite their borrowers in a more traditional way, effectively requiring them to evaluate whether this loan will benefit the borrower more than it will harm them. The industry says this new requirement will cripple it. Requiring them to pull credit reports and take the time to evaluate a loan in the manner that normal lenders do will greatly increase their costs, meaning that the cost of these loans – already in the triple and quadruple digits – will increase. As a character-based lender that works with weak credit clients, we do understand that evaluating a person’s creditworthiness, particularly when credit scores are not the basis for the loan (as in our case), takes a greater deal of time and expense than just handing someone cash and taking their bank account information. There is no question that the business model of payday lenders will radically change, which, of course, is the intent of the CFPB.
While some articles have posited otherwise, there is no question in our minds that predatory lending is highly profitable. Many mainstream companies publicly take moral objection to the practice, but in looking at stock offerings and annual reports, we have found many of them are investors in these companies. The returns are just too great. The Journal has run several articles recently on Google banning payday lending ads, while simultaneously being an investor in LendUp.
Efforts at the municipal level to regulate predatory lenders have typically been in the form of zoning control. The response by these lenders has been to change the terminology of their products and services so that they can avoid the classifications in the tighter zoning regulations. The industry finds a way to maneuver, no matter what is thrown at it. When half of all Americans are potential customers for a very lucrative business, the financial temptation is more than enough to overcome the moral objection.
It remains to be seen what the consequences of this new regulation will be. At On the Road Lending our approach has been to offer a lower-cost, socially conscious option for consumers. Not only do we provide consumer-beneficial car loans, we also ensure that our clients have an extended warranty on their vehicles so that they avoid the financial shocks that come from unexpected auto repair bills. This is often what drives consumers to payday loans. In addition, our clients have, on average, $150 more in cash because of their reduced expenses each month and many of them manage to save.
It has proven difficult to regulate our way out of predatory lending in our society. Our strategy is to crowd them out by offering a market-based alternative.
Sandra found us through St Luke Community UMC and our partner Jubilee Park and Community Center. A single mother with a two year old and a 17 year old, she had a high-mileage older vehicle plagued with constant costly repairs. When she came to us, she no longer had a car, and her son was giving her rides to work, the grocery store and doctor’s appointments. When she told us her story, she emphasized that she wanted to learn how to be more financially secure for her children. Like many of our clients, Sandra couldn’t believe we would take a chance on her and was afraid that our program was too good to be true. We worked through her fears by providing guidance and financial education and helped her select a new 2016 Toyota Corolla. Now Sandra is a firm believer in On the Road Lending. “It didn’t hit me until I got behind the wheel of the car,” she says. “I broke down and cried my eyes out just knowing I would be able to get to work on time and not lose my job. Having a car is peace of mind. Thank you, again!”
CLICK HERE to celebrate Sandra by helping others like her get on the road to success!”
Not your average traffic stop
Last month, a Mountain View, California policeman noticed that traffic was piling up behind a little white car. The car was only going 24 miles per hour in a 35 mph zone, so he decided to pull it over and talk with the driver. There was just one problem. There wasn’t one.
Google has logged over a million miles on California roads since 2009 testing its driverless concept cars. Forecasters predict that these cars will be on the roads in most major cities within only three years and many companies are pursuing their own versions – Google, Apple, Tesla, and many mainstream manufacturers.
There have been a lot of questions raised about driverless cars, but the most compelling deal with how the technology interacts with a human world. If we have a split second to decide between hitting a person or animal in our path with swerving off the road and into a tree, how do we make that decision? How does a driverless car make that decision?
It will be interesting to see what happens with this idea. It would seem, given the proliferation of distracted driving – it seems now that almost every car you see is being driven by someone staring at their phone instead of the road – that driverless cars would reduce accidents. Will people embrace them? Do they offer a way for people to relax and read the paper on their way into work like people who ride mass transit do? Will they be affordable enough that an average person can afford one? Will they become widely used? Time will tell.
We more often read about the fact that driverless cars are programmed too perfectly, that they obey the traffic laws better than humans do. But what happens in the case of this traffic stop? If a car driven by a human would have been given a ticket for driving too slow, what happens with a car not driven by a human? Who gets the ticket?
An Unknown Story
Since Thanksgiving is tomorrow, we wanted to write about something other than mobility and finance. We wanted to write about history. There was a great editorial in today’s Wall Street Journal about the untold story of Squanto, the friendly Indian who helped the Pilgrims survive their early days in Plymouth. The remarkable story of Squanto’s life and his fortuitous meeting of the Pilgrims is not well-known and is a fascinating read. We won’t restate the story in this blog, but it inspired us and we hope you’ll take a minute to click on the link below to read the story as written in the Journal.
Today we give thanks for the many people who are on the On the Road Lending journey with us. We are grateful to the women, men and children who are our clients who openly share their stories with us and who work with us to further our mission. We are grateful to the investors in our impact investment fund and to the supporters of our nonprofit who have placed their trust in us to be good stewards of the funds they have shared. We are grateful to our boards of directors, our staff, and our volunteers who give their time to this endeavor. And we are grateful to you, people who are interested enough in our work to take the time to look at our Web site and read about our work.
As you travel to be with your family this holiday, we hope you will remember what a blessing it is to have a car to take you their homes (or take you to the airport to fly). Being able to get together with family and friends is an important outcome of the better life we try to provide by having better transportation.
We never know who will be put in our path, where our journey will take us, or how our own story will be written.