This Dallas nonprofit uses character-based lending for its affordable car loan program. It’s resulted in a 97% repayment rate and financial stability for thousands.
The Dallas–Fort Worth metroplex covers 15,600 square miles and is home to 7.6 million people. Unfortunately, the region’s public transportation system doesn’t allow many residents to commute to work or school, or to take care of everyday chores. And without a car, doing any of these things can take up a big chunk of the day.
This was the case for Lisa. Without a reliable car, she found herself taking Ubers and buses to her two part-time jobs. She had to turn down a third part-time job as a hospice aide due to lack of time.
That’s when Lisa learned about On the Road Lending. The nonprofit organization was founded in 2013 to address a substantial need: helping individuals and families with low incomes overcome transportation barriers so they can get to work, lead healthier lives, run everyday chores, build credit, and become more financially independent.
On the Road Lending provides loans to borrowers that other financial institutions often pass over due to lacking credit histories. To date, the organization has a 97% repayment rate. It turned out to be a game changer for Lisa. After purchasing a 2014 Toyota Camry with her loan, she was able to land a full-time job in hospice care while also finishing her education; the additional income allowed her to start saving money to buy a house. And she’s never been late on her car loan payment.
Affordable car loan program based on relationships
On the Road Lending’s affordable car loan program is part of its broader goal of helping people in poverty build generational wealth, says founder Michelle Corson. Having a car allows people to be more productive and earn more money, which in turn lets them save more and build for their family’s future.
Corson, a self-proclaimed car lover, was inspired to start the organization while driving through Dallas. “I saw people sitting on the curb with their feet out in the street at a bus stop, but there was no bench,” she says. “There was no cover. There was no place for them to sit. I started doing homework about mass transit and found out it takes five times longer to get anywhere you could get in 20 minutes by car. Only then did I understand what a big barrier transportation was to many people, and how amazingly liberating owning a reliable car can be.”
Unlike other financial institutions that rely on credit scores, On the Road Lending relies on relationships to evaluate someone’s finances and likelihood to repay. This includes their involvement and reputation in their community and learning about their financial history to better understand their unique circumstances. This lending approach is how banking was done prior to credit cards, when you would walk into a local branch and form a relationship with an agent.
“We take about 20 minutes to have a conversation with someone and that’s all it really takes to find out why their credit is a certain way,” Corson says. “This lets us determine how motivated they are to own their finances and make the appropriate changes. It’s not a huge investment in time, and I believe that if other lenders took the same approach a lot of false assumptions would be overcome.”
On the Road Lending offers more than just a good car
Roughly 60% of On the Road Lending clients are considered low- to moderate-income, with an average credit score of 510. According to Corson, 80% of their borrowers are people of color, 70% are women, and 52% have either been through some form of abuse or have some kind of disability.
Being able to purchase a car isn’t only about commuting to work. Corson says that she’s seen clients triple their income and continue their education thanks to their lending platform.
According to Corson’s research, their clients earn up to an additional $32,000 per year thanks to increased mobility — they’re able to spend more hours working and being productive rather than sitting at bus stops or paying for rides. It also enables them to take on part-time work in locations they normally wouldn’t be able to get to. Overall, Corson’s clients are able to save an additional $20,000 over a five-year period.
According to a study conducted last year, On the Road Companies have had $273 million in impact over its decade of existence. This includes the lending branch as well as Corson’s other companies, On the Road Garage and On the Road Motors. The latter is a car dealership that cuts out financial middlemen so they can offer clients more affordable prices for reliable cars.
“We’re not selling old junkers on the corner,” she says. “The woman who took our very first loan would call me once a week to tell me that she had washed her car. She was so proud of it, and she wanted us to know that she was taking good care of it. It’s just an amazing sense of pride and joy for the people that we’re working with.”
On the Road Lending across America
On the Road Lending currently operates in Alabama, Georgia, Mississippi, and Texas, with plans on expanding to 10 more states in the next few years. Even though the average loan amount has increased from $13,000 in 2013 to $24,000 in 2022, their clients maintain a high repayment rate. Corson believes this is in large part due to the trust that’s built with her clients.
This holistic approach to purchasing a car — which includes financial education, low interest rates, communicative agents, and a network that cuts out third parties — offers every On the Road borrower a sense of dignity and respect that’s often lacking in traditional finance. And that makes a world of difference.
“They’ve paid off their loan and say, ‘I bought a car on my own because I knew enough about how to do it and I got 2% financing instead of 22% financing,” says Corson. “It’s a joyful thing for them.”