Predatory Car Loans Hurt NY Families - CDFIs Can Help

For most working families, a car isn't a luxury — it's how you get to your shift, your kids' school, the grocery store. So when a dealership says "you're pre-approved," it can feel like a lifeline. Too often, though, it's the start of a debt trap that's hard to escape.

More Perfect Union, an Emmy-winning, nonprofit newsroom whose mission is to build power for working people, talked to Rochester resident Tanniqua Cross. She works as a teacher’s aide at a school for disabled kids. She bought a used car from a local dealer, with financing from Credit Acceptance Corporation. They put her in a $24,000 loan for a car with a Blue Book value of $6,000 - $13,000. With interest, her total cost for the car would be $46,000.

This video explores the situation in more detail, but it was a bad deal even before the brakes failed and the car was totaled.

Tanniqua isn’t alone. According to the National Consumer Law Center (NCLC), the average APR for borrowers with credit scored under 600 is around 20%, auto delinquencies have hit a 15-year high, and repossessions jumped 43% from 2022 to 2024.

Even worse, getting out of a predatory loan is complicated, and the lender may charge a pre-payment penalty the borrower can't afford. That's where CDFIs can help. As mission-driven, Treasury-certified lenders, many CDFIs and their nonprofit partners offer auto refinancing built around fair rates, no hidden add-ons, payments sized to a real budget, and credit counseling alongside the loan.

According to Ben Pecora-Sanefski, former Chief Lending Officer at Genesee Co-Op Federal Credit Union, a CDFI in Rochester, “We’ve had members go into a dealership, they get a 22% interest rate on an auto loan. And we refinance them and it will be 8%, 7%, somewhere in that range.” When asked why lenders like Credit Acceptance Corporation don’t offer similar rates, he replied, “Profit. They want to make

more money. That’s the bottom line.”

CDFIs like Genesee Co-Op meet enormous market demand, providing capital for housing, small business, consumers and community revitalization. That’s why it’s vitally important that the funds approved by Congress to support the Federal CDFI Fund are released as soon as possible. Fiscal Year 2025 CDFI Fund appropriations must be in recipients' accounts by September 30 or they may be reallocated.

For New Yorkers like Tanniqua, CDFIs can be the difference between a car that gets her to work and her kids to doctor appointments, and a debt that follows her long after the car is gone.