Oakton, Va., Oct. 16, 2006— The national Ways to Work car loan program has helped working families achieve remarkable gains in income, job retention and quality of life, according to a new independent evaluation. Northern Virginia Family Service (NVFS) has operated a Ways to Work program in Oakton for more than two years, helping 67 families advance.
“Ways to Work serves a critical need in this area by providing affordable credit to families who would otherwise struggle to buy a car,” said NVFS President and CEO Mary Agee. “Having a reliable car allows many of these clients to move into better paying jobs and to have more time to spend with their families. This national evaluation reinforces our on-the-ground experience in Northern Virginia.”
Since July 2004, the NVFS Ways to Work program has guaranteed 67 loans totaling about $202,000 during its two years of operation. Loans are made by Virginia Commerce Bank and guaranteed by Ways to Work. NVFS clients are typically single mothers working in service-sector jobs. In many cases, mass transit in the community cannot fully meet the needs of the population served by Ways to Work—low-wage workers going to jobs or taking children to day care and school.
“The numbers show that giving working families access to even modest loans will lead to higher incomes and a better quality of life,” said Sharon LeGrande, NVFS Ways to Work program manager. “The loans have a substantial impact.”
The evaluation by the OMG Center for Collaborative Learning in Philadelphia documented that Ways to Work clients are going on to open up bank accounts or take out new loans, fulfilling the program’s goal of helping clients become creditworthy and involved with mainstream financial institutions.
Ways to Work provides loans of as much as $4,000 to qualifying working families. Qualified borrowers must also be deemed non-creditworthy by mainstream financial institutions in order to receive the 8 percent interest loans. More than nine out of 10 Ways to Work clients use the loans to purchase used cars.
The evaluation found that Ways to Work clients saw their average take-home pay increase by 41 percent and that more than 80 percent of the program’s clients reported that owning a car had helped them hold onto a job and reduce lateness. A significant majority of clients also reported that having a car had improved their quality of life, helped them provide better care for their children and allowed them to dedicate more time to education or job training.
“The evaluation makes clear that these loans have led to better jobs, more stable employment and a better life for thousands of families in Northern Virginia and across the country,” said Jeffrey E. Faulkner, president of Ways to Work. “These are effective investments we’re making.”
A key focus of Ways to Work is to help clients establish better credit records and become better equipped to handle their finances. NVFS requires that clients take financial literacy training and offer money management seminars in partnership with Capital One.
“We work with our clients to make sure their spending is matching their budget,” LeGrande said. “We want them to have the tools to not only pay off our loan, but to improve their financial situation enough that they can take out new loans in the future—to buy the next car or ultimately a home.”
Ways to Work has achieved a strong repayment rate, with more than 87 percent of loan funds having been repaid during the past 10 years. LeGrande added that the program’s clients speak enthusiastically about how owning a car has allowed them to be more active in their churches and communities, or to take their children to participate in after-school activities.
Ways to Work began operation in 1984 as the Family Loan Program within the McKnight Foundation in Minneapolis. The foundation launched the loan program after holding focus groups with women who were leaving welfare. The women made clear that a key need was access to low-cost loans that would help them move to self-sufficiency.
Since its launch, the program has received important financial support from McKnight and other foundations; the federal government, especially the Federal Transit Administration, which has committed $16 million through the Job Access and Reverse Commute program; and major private companies, including Bank of America, which provided $8 million in low-interest loan capital in 1999.
Now based in Milwaukee, the program operates in 48 communities in 24 states. It has helped more than 23,000 families stabilize or improve their financial situation through over $36 million in loan funds used to purchase vehicles, repair them or for other work-related purposes. For a copy of the OMG evaluation, visit www.waystowork.org.
Ways to Work is a unique Community Development Financial Institution based in Milwaukee, WI. Through a network of loan offices across the country, Ways to Work provides small, short-term, low-interest loans to working poor families with challenging credit histories. The program provides an alternative to predatory lenders for people with a demonstrated commitment to achieving increased self-sufficiency and intent on pursuing a higher degree of success in mainstream financial markets.