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A driving force behind car loans

A program helps low-income parents get vehicles and learn about credit.

By NICOLE JOHNSON
Published November 10, 2006

After her car broke down, Margaret Williams-Lewis used her mother's car to shuttle between work in Oldsmar and her children's school in Largo.

Then gas prices skyrocketed and she could no longer afford to drive back home midday to help her mother, with whom she shared a house in St. Petersburg, and then all the way back to work.

Williams-Lewis needed her own car, but like many people, she had credit problems.

She eventually turned to Ways to Work, a national program that provides low-interest auto loans to working parents who have less than average credit scores.

The program, with offices in St. Petersburg and Clearwater, is based on the principle that reliable transportation can help low-income families thrive financially.

Williams-Lewis, 29, qualified for a $3,000 car loan in January. She now lives in Clearwater and drives to her job as a medical biller in a 1998 Plymouth Voyager.

"Everybody falls on hard times," said Williams-Lewis, a mother of four. "Although bills are important, sometimes you fall behind because you're thinking about putting food on the table."

The program, funded by the U.S. Department of Transportation, operates in more than 20 states. Locally, it's based out of the Family Services Center in St. Petersburg at 928 22nd Ave. S.

Clients also learn how to rebuild their credit.

"Sometimes this is the piece of the puzzle that brings everything together," said Adam Mayefsky, spokesman for Ways to Work.

The program came to Pinellas County in 1999 with federal and private contributions. At first, it handed out loans for just about everything from day care to utility bills. The program ended up with a 30 percent default rate. After a funding cut, the program shut down in early 2004. It reopened in 2005 with a focus on car loans.

Ways to Work doesn't actually lend the money. The program guarantees to pay back the loans so that banks are more likely to lend money to the program's clients.

The program, which has a staff of four, operates on a $250,000 annual budget. To avoid defaulted loans, the Ways to Work staffers developed a way to better screen clients. They look at rental histories and how reliably the clients paid utility bills, among other things.

"We created a client profile so we could look at the entire character of the person," said Elaine Taylor, program supervisor.

Clients must also complete a three-hour financial management class that includes budgeting, how to understand interest rates and how to read a credit score. After a client completes the class and application, a loan review committee decides if the person is likely to pay back the loan. If approved, clients get a maximum $3,000 loan, repayable over two years at an 8 percent interest rate.

This year, the program has granted 59 car loans. While some clients still default on loans - six this year - the program tries to renegotiate with them.

"Bottom line: people have to be in a place that they want to help themselves," Taylor said.

If clients aren't granted a loan, they are often referred to the National Debt Foundation and are encouraged to attend financial education classes, said Cynthia Smith, program educator.

"If you do that, we know you're serious," Smith said.

Ways to Work also tries to show clients that they are capable of regaining financial control and building their wealth. Many clients only need some guidance, Smith said.

"We all start believing that when you don't have a lot of money you can't save," Smith said. "But when you get focused, you can."

As a condition of loan approval, clients must start a savings account and contribute $25 a month. Joyce Gamble, who saved $400 in her account, said the money came in handy when her 1997 Pontiac Grand Am needed repairs.

"I was so proud of that savings, but more than the money, I was contributing to myself," she said. "I want to work to get that savings back up."

In Gamble's case, it wasn't a matter of buying a car. Gamble had a vehicle when she came to Ways to Work last year. It was the payment that was sinking her financially.

Gamble, 55, has legal custody of her three grandchildren and was going through a separation from her husband. She feared falling behind in her bills. So Gamble used a Ways to Work loan to pay off her higher interest-rate loan and bought another car at the program's lower interest rate. Her car payment went from $311 a month to $161.49.

Ways to Work staffers pride themselves on running a program that is based on communication and a sincerity.

"We establish the rapport from the beginning," Smith said. "It's like you're our friend, and we want you to be successful."

Nicole Johnson can be reached at njohnson@sptimes.com or (727)445-4162.

FAST FACTS

To learn more

For more information about Ways to Work, call 727 824-0910.

[Last modified November 9, 2006, 10:36:27]