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by, Sandra V. Feder
Robert Chambers, 61, says he's always been an active guy. Through a varied career which included a stint in the Navy, work as an electrical engineer and as a business owner, Chambers enjoyed new challenges. So when a friend in the car business invited him to come sell cars, he gave it a try. "I'd always enjoyed working with people, and it was too early to retire," said Chambers, "Besides, I'm not the golfing type."
But what he saw in his five years on the car lot outraged him. Salesmen would high-five each other after talking a low-income customer into buying an over-priced, older car, at a high interest rate. "I just continued to increase my frustration watching people who make eight, nine, or 10 dollars an hour be taken to an older car - an older car is more profitable for the salesman," he explained.
Then, Chambers would watch as clients were taken into the business office. "Banks tier credit rates," he explained. "If you have bad credit, you get a higher rate. If you have no credit at all, you get into paying 20-30 percent interest to buy a car. Finally, I decided I wanted to do something about it."
What he did was to create Bonnie CLAC (Car Loans and Counseling) in 2001 to put low-income people into good cars. Often a car is a necessity to get and keep a job, especially in rural areas where public transportation is less available. The non-profit organization guides buyers toward new, base-model cars at prices the organization has negotiated with car dealers. Bonnie CLAC also works with local banks to provide loans with the kind of terms usually reserved for those with more solid credit. The organization guarantees the loans and provides financial counseling for clients.
"It's been an evolutionary process," said Chambers. Using the organization Fannie Mae as a model, Chambers tried to get banks interested. Fannie Mae started as a non-profit that helped people buy homes by guaranteeing loans. But Chambers found banks reluctant to participate. So the plan was revised to lessen the risk of default on the loans by incorporating budget counseling and financial literacy courses into the program.
The organization's name became Bonnie CLAC because Bonnie seemed like a friendly name and 73 percent of the group's clients are women. "Men think they can buy cars better than anyone else," he said, " while women are generally more receptive" to the kind of help the organization offers.
Clients of the organization pay $800, which is rolled into their loans so they do not have to pay the money upfront. The $800 is offset by the $7000 Chambers estimates that each client saves over the term of the guaranteed loan. The average length of a Bonnie CLAC car loan is five and a half years or 66 months, which is enough time for clients to pay off the loan. "We do that because you can get a lower interest rate for 66 months," said Chambers. "If you go to 67 months it bumps it up to a higher interest rate."
The organization's clients must have a job and the ability to meet loan payments, information which is ascertained by a careful review of each client's financial situation. "We get up close and personal," said Chambers. In a group environment, clients are taught how to save money and balance a checkbook.
"It's one of the greatest and most innovative ideas," said Ramona Dow, Vice President of Marketing and Strategic Initiatives of Northeast Credit Union in Portsmouth, New Hampshire which participates in the program. "He really has found a solution to a big problem."
The amount of time Bonnie CLAC staff members are involved with a client varies greatly. The longest the organization has worked with an individual is two years, but most clients purchase a car within a week or two, Chambers said. Some clients must take the financial and budget courses before Bonnie CLAC will guarantee their loans while others have such good records they are allowed to skip the classes altogether. But generally, Bonnie CLAC will help clients get into cars as quickly as possible and then will ask clients to sign an agreement to take the courses. Along with purchasing a car and providing financial counseling, the organization also will work with clients to resolve past credit problems like credit card debt or other financial problems such as those arising from an illness or divorce.
And Bonnie CLAC works. "One of our greatest prides is that our default rate is below commercial averages," said Chambers. Initially, he said, he had to talk lenders into participating in the program, but now they are asking to be a part of it. It is a low-risk way for them to put money back into their communities, he explained.
Dow, of Northeast Credit Union, agrees. The credit union's role is to help its members succeed, she said. "If people miss work, then bills don't get paid. I think in the past year we've helped about 70 credit union members obtain cars through this program," said Dow, whose credit union has 48,000 members and $480 million in assets. "It's a great collaborative effort. When Bob Chambers and I got together we just clicked. We were traveling the same road together."
Bonnie CLAC steers clients to base-model new cars and helps them purchase extended warranties which last the life of the loan. And that, said Dow, is one the program's greatest strengths. "He's able to get people into brand new cars that ares less likely to break down," she said. Chambers saw this as an important priority for the program. "The greatest reason people have repossessions is that the car breaks down and they can't get it fixed," he said.
He also sees some universal benefits from the program. Most low-income clients are pushed by salesmen toward used cars, which according to Chambers, are usually gas-guzzling SUVs or luxury cars with lots of miles on them. Putting these buyers into new, fuel-efficient models, helps the environment as well as the clients. "The average client sees a 30 gallon per month reduction in gas demand," he said. "It won't solve global warming, but it will help a little."
One of the greatest joys for Chambers is to see the difference the program has made in the lives of his clients. "Frequently after graduation, our clients will go on to get better paying jobs and jobs with benefits," rather than having to work two or three part-time jobs, he said. Also, there is a significant reduction in stress. "Most people don't understand the stress of driving an unreliable car you're not sure is going to start in the morning or being on the road with your children and having it break down."
Chambers also said he sees a change in family life for his clients. "It's a very middle class thing, to take your kids to games," he said. "Now, clients have more time to spend with their families."
The group, which has provided almost $12 million in loans and includes a staff of 12, recently received national attention when Chambers was named a finalist for the Purpose Prize and was awarded $10,000 by Civic Ventures, a California-based think tank dedicated to helping people find personally rewarding careers and volunteer work as they age.
Chambers, who takes a salary for his work, said he can see a time when he will retire but continue to work for the organization, which now has branches in New Hampshire, Vermont, and Maine. Of the approximately 50 people who have contacted Bonnie CLAC about opening offices in other parts of the country, almost half are retired people, he said.
In the meantime, he is working to create more opportunities for older people to get involved by creating part-time positions. "We're making it flexible so they can go to Florida for a few months if they want," Chambers said. As for himself, Florida has been on his mind recently for a different reason. A friend wants to open a Bonnie CLAC branch there. It's a good thing he's not the golfing type, because it looks like for Chambers, retirement will have to wait.
Sandra V. Feder is a freelance writer based in the San Fransisco Bay Area. She can be reached at sandra@darynkagan.com. Her website is
www.sandravfeder.com.
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