New lease of life for used cars
Government vehicles could find a new life as cars for lower-income families under a scheme devised at an Auckland financial inclusion forum last month.
The Financial Inclusion Industry Forum was a watershed meeting to forge a partnership between a Government intent on breaking cycles of debt-induced poverty, community groups, and banks and other lenders.
But ministers Kris Faafoi and Carmel Sepuloni want action quickly, and have given the government agencies, community groups and private companies involved until October to get pilot schemes organised.
Three of the pilot schemes being considered are to get lower-income families into reliable, safe cars, funded with loans that don’t suck up so much of their income that it tips them into poverty.
High-interest loans taken out to buy unsafe, expensive-to-maintain second-hand cars too often lead to spiralling bad debts.
‘‘We were looking at alternative ways of getting people into vehicles they could afford, and which they could afford to maintain,’’ said Lyn McMorran from the Financial Services Federation of second-tier lenders including Instant Finance, MTF, and Toyota Finance, which is leading the project.
‘‘It was about safe cars and appropriate financing.’’
One idea was for a scheme where a supply of affordable, reliable secondhand vehicles was organised, with banks and second-tier lenders providing loans to lower-income families buying them.
‘‘Our members have got access to the vehicles,’’ McMorran said.
There were two other possible affordable motoring pilots.
‘‘Tens of thousands of cars are leased by the Government and corporates,’’ McMorran said.
When no longer needed, she said, ‘‘they just get sold. What if we harnessed that pool of vehicles and leased them to people who meet the criteria?’’.
Another idea was the creation of community ride-sharing schemes in lower-income areas where exGovernment vehicles became available on a pay-per-use basis at a modest cost.
A pilot plan for a nationwide savings scheme to help individuals, or families, to build up their own emergency funds was also being developed, with Peter Cordzt from the Commission For Financial Capability leading the project.
The full details of the scheme are yet to be worked out, but it could piggyback off the KiwiSaver infrastructure, especially the part of the system run by Inland Revenue, which collects contributions from savers’ wages.
‘‘Inland Revenue really need to be a part of that solution,’’ Cordzt said.