The Milwaukee County Social Development Commission’s program of providing short-term, low-interest used-automobile loans to working families has been suspended due to increasing rates of default.
The Ways to Work program has had an average default rate of 7%, notably lower than the national average of 10%. However, the SDC’s default rate jumped to 25.9% in 2010.
Jan Stenlund, director of program services for the SDC, said, “Defaults (defined as more than 120 days overdue) stayed in a good place, but after a while delinquencies grew as unemployment became problematic.”
It is not just the increase in defaults that has led to the suspension to the program; it is also due to the financial health of the SDC. The Ways to Work program, though headquartered in Milwaukee, offers more than just auto loans in Milwaukee; they offer loans in 23 states and the District of Columbia. Its 2012 anti-poverty budget is $54 million, a decrease of 17% from 2011.
Here at Auto Loans Wisconsin, we think this is a sad development. The Ways to Work program was a revolutionary program, largely based on the (somewhat counterintuitive) principle that cars for poor people can actually mitigate poverty.