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How Freedom First Credit Union Is Leveraging Creative, Character-Based Lending To Approve Community Members For Auto Loans 

Borrower StoriesCommunity PartnersLow Income Designated Credit Union

When Norma Fralin needed a car in 2016, she didn’t know where to go. She’d never felt comfortable navigating dealerships and interacting with used-car salesmen, and because there were uncertainties surrounding her credit, Norma didn’t know what kind of auto loan she’d be able to get. 

Kim English, the Responsible Rides Coordinator at Freedom First Credit Union

That’s when Norma’s daughter, Catina, told her about Freedom First Credit Union’s Responsible Rides® program. Catina had used the program to get a vehicle of her own. Norma set up a time to speak with Kim English, the Responsible Rides® coordinator, and within a week, Norma had a car. “It was awesome to work with Kim,” she said. “She really made me feel comfortable.”

Since 1956, Freedom First Credit Union has been serving communities throughout Southwest and Central Virginia through local investments, lower rates on loans, higher rates on deposits, and innovative banking services that support members working to build their financial independence. Freedom First is also a CNote Impact Cash® Partner. CNote deploys Impact Cash® dollars to mission-driven and FDIC- and NCUA-insured partners like Freedom First, generating returns on institutional investors’ cash allocations while supporting financially underserved communities across the country.

A cornerstone of Freedom First’s work is its award-winning Responsible Rides® auto purchase program, which Kim has coordinated since September of 2015. The program is geared toward low- to moderate-income earners who need their own car but struggle to afford a traditional car loan due to credit challenges. Responsible Rides®, however, doesn’t just hand out car keys. Instead, applicants must meet specific guidelines, including having a valid driver’s license, the ability to have full-coverage auto insurance, and proof of employment that goes back at least 90 days. Applicants also can’t have more than $1,500 in unpaid collections, judgments, or charge-offs. Additionally, in order to qualify for Responsible Rides®, individuals must meet with a financial counselor and complete courses on finances and budgeting, as well as car maintenance and care. 

One thing that Kim regularly sees at Responsible Rides® is people who come in with zero credit. In those situations, Kim is able to look at alternative pay history, such as utility bills, insurance payments, rent payments, or even court funds, as a proxy for credit. Also, when Kim submits a loan application to Freedom First’s underwriters, the applicant gets to write about how having a car will change their life. By being creative and considering someone’s character and personal story alongside the above-mentioned criteria, Kim is able to get more individuals approved for auto loans. Those loans cap out at 18%, which is significantly lower than predatory lenders’ rates. However, once an individual’s credit begins to improve, Freedom First is able to refinance their auto loan to lower their monthly payment. 

Kim estimates that approximately 80% of the individuals she works with through Responsible Rides® are single mothers. Kim also works with a lot of young people who are getting their first jobs, but who don’t have transportation, and she works with older, fixed-income individuals who struggle to get themselves to doctor’s appointments and the grocery store. She recalled one story about a client whom she recently assisted. “We met at the dealership and she got in her car,” Kim said, “and the woman said ‘I don’t have to get on the bus now. I can work different hours at my job. I don’t have to be afraid that I’m gonna get off late and miss the bus.’ There are just so many stories like that within this program.”

Unsurprisingly, Kim finds her work with Responsible Rides® extremely rewarding—but she isn’t the only one who feels that way. Local used-car dealers also enjoy participating in the program. An important aspect of Responsible Rides® is that individuals have the option to pick their own car, including test driving it and getting it checked by a certified mechanic. Therefore, Kim does everything she can—including doing a fair bit of research—to ensure that Responsible Rides®’ clients have positive experiences getting their cars from dealerships. 

Over the years, Kim has curated two lists of dealerships: one is a do-not-use list of predatory and poor-quality dealers, and the other is a list of hand-picked, small, often mom-and-pop dealerships who are willing to roll out the red carpet for Responsible Rides®’ recipients. Local dealers have been willing to add extended warranties, waive processing fees, and cut selling prices by as much as $1,500 to get people in their cars. “The dealers I have are amazing,” said Kim. “They love this program and they want to stay on my list, because they know these people need to get into vehicles, but they also know that if they treat these people right, once their credit gets better, they’re gonna come back and tell their friends. It’s all about relationships.”

Relationships are one way that Kim has been able to originate 523 loans totaling $5.9 million since she began coordinating Responsible Rides eight years ago. Kim works closely with a network of local nonprofit partners, including Total Action for Progress (TAP), New River Community Action, and Solutions That Empower People (STEP, Inc.) to engage community members. Kim also relies on internal referrals from Freedom First’s team of financial counselors, and many people contact her thanks to previous clients’ word-of-mouth.

That was the case for the Fralin family. For them, Freedom First Credit Union’s auto-loan program has become a family affair: word-of-mouth has led four family members spanning three generations to participate in Responsible Rides®. After Catina referred Norma to the program, Norma in turn told her daughter, Tonya, and grandson, Isiah. Isiah connected with Kim last December, when he got his car. Since then, he’s been working with Freedom First financial counselors to build his credit, budget his money better, and save for a future home.

Tonya, too, has benefited from the credit union’s Responsible Rides® program. When she met with Kim in 2019, she needed to build her credit. Kim helped to get her a car, and Tonya opened a Freedom First account and completed her financial counseling coursework. Within five years, Tonya was able to build up her credit so much so that she and her husband were able to purchase their first home in 2022. “Just talking with Kim really helped me out a lot,” Tonya said. “I like the fact that Freedom First keeps in touch with you, not only with your car and your credit; they keep in touch with you to see how things are going as far as your finances and life. It’s not just about a car or getting a loan: it’s about helping you to achieve your goals.” 

Learn More:

  • Freedom First Credit Union is a member-owned, federally insured community financial institution headquartered in Roanoke, VA since its founding in 1956.
  • Responsible Rides® is a Freedom First Credit Union program geared toward low- to moderate-income earners who need their own car but struggle to afford a traditional car loan due to credit challenges.
  • CNote is a women-led investment platform that empowers individuals and institutions to invest locally to further economic equality, racial justice, gender equity, and address climate change.

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