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The Cruel Cost of Clunkers
Suzie Boss, 2 Sep 09
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Cash for Clunkers, the U.S. federal program that offered rebates to buyers of fuel-efficient cars, sputtered to a halt this week after burning through $3 billion in federal funding. The program wasn’t without controversy, but it did clear the roads of an estimated 500,000 gas guzzlers. Meanwhile, thousands of low-income consumers pay dearly to keep their clunkers running so they can get to work and stay a step ahead of the bill collector. An innovative nonprofit called Bonnie CLAC has discovered that getting these families into reliable, fuel-efficient vehicles can improve everything from their job prospects to family eating habits to children’s health.

Bonnie CLAC (which stands for Car Loans and Counseling) started in rural New Hampshire, where public transportation options are limited. Founder Robert Chambers, a former car salesman, saw how used car dealers routinely prey on the poor. Buyers who come in with spotty credit histories and little cash typically drive away in the worst cars that are almost certain to break down. That sets off a cascade of woes — being late to work, missing medical appointments, adding car repair bills to an already stretched budget.

Chambers started Bonnie CLAC to address the web of issues tied to affordable transportation for the working poor. His initiative has earned him the Purpose Prize, which recognizes social innovators who are over 60, and generated a recent invitation to the White House to meet with President Obama for a summit on community solutions.

Bonnie CLAC acts as a middle man for its pool of clients, negotiating lower interest rates and discounted prices on late-model, fuel-efficient but no-frills cars. Clients don’t have to do any haggling themselves. But before they get their new cars, they do take a practical, six-week course in financial education. Some need more intensive counseling to clean up their credit. Since 2001, Bonnie CLAC has helped more than 1,200 families finance more than $13 million in loans. The organization also maintains a fleet of 80 used cars for a “bridge” program, which helps clients solve immediate transportation hassles while they go through the financial literacy program.

“There are many moving parts to this,” acknowledges program CEO Terri Steingrebe. “We want to demonstrate that, with the right services, people that the banks see as ‘unlendable’ can turn into good credit risks.” Her clients offer a snapshot of the working poor: About 70 percent are female. Many are single parents with child-care needs. Some work two or more jobs. About 30 percent work in health care, often as nurse’s aides or home-health workers. Many come from generational poverty. “We work with people who are trying to better themselves, to build a better life,” Steingrebe says, “and that often means further education — which also requires reliable transportation.”

FinFit_advice_211x154.jpgThe program’s successful track record in rural New England has sparked invitations to bring the concept to more communities. Bonnie CLAC is currently laying the groundwork to expand into the Boston area next year.

Steingrebe didn’t expect to find high demand for the program in an urban area, where public transportation options are plentiful. But conversations with Boston-area hospital administrators pointed to the need. To find affordable housing, lower-wage employees often live far from where they work. They do shift work that may involve commuting at hours when public transportation is scarce. Home health care workers typically use their own vehicles to get to clients’ homes. “It turns out that transportation is high on their list of needs,” Steingrebe discovered. “This is what connects them to child care, to health care, and even to shopping for affordable food.”

As Bonnie CLAC moves into its first urban market, other cities will be watching. The organization receives frequent calls from communities interested in borrowing the model. Steingrebe is proceeding with caution. She wants to gather more information before going to a bigger scale. “Before we can create a blueprint that someone else can use,” she says, “we need to understand how this model works in different contexts. We don’t want to get ahead of ourselves.”

Suzie Boss is a journalist from Portland, Ore., who writes about education and social change for Edutopia, the Stanford Social Innovation Review, and other publications.

Photos courtesy of Bonnie CLAC.

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Comments

Nice article. Great program.


Posted by: Bill S on 2 Sep 09

In july my car qualified for the cash for clunkers.

a 96 jeep with 200k miles on it and desperate need of a new clutch. I can't afford a new car, so I thought, heck, I can use the 4500 for a Versa. That's Nissan's cheapest cracker box, but does very well on gas and it would be new! after everything said and done, it would cost me about 6K.

Well, july came, but the CFC program was such a success, that they ran out of money so I was out of luck. Well, Obama put more dough in and off I went to get that Versa.

well well well, wouldn't you know it, my car no longer qualified. What's that you say? how can that be when only a month prior it did?

after a little back and forth with the people at cars.gov, they wrote to me that they had "revalued" a number of cars.

In other words, their very successful program was too successful. Now call me crazy, but if there is only a set amount of money, what is the point of "revaluing" the MPG for various vehicles?

well, long story short, my experience with the program was awful, but that doesn't mean it wasn't a success, I just find their "meddling" with the numbers a little suspect.

I now have to hope my car can limp along long enough to keep me employeed.


Posted by: Thomas Jefferson on 4 Sep 09

TJ
Are you gonna sell the Jeep anyways?


Posted by: Yoni from Israel on 7 Sep 09

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