This blog has repeated reported on microfinance programs in the developing world which give loans to poor individuals. This model has been extended to work even in the U.S. Ways to Work provides loans to poor Americans, often to purchase or repair an automobile. After welfare reform acts in the 1990s, many states required individuals to work in order to be eligible for welfare. However, working involves significant fixed cost. An individual who wants to have a full-time job must be able to purchase work clothes, pay for child care, and most–importantly–find a form of transportation to an from work.
In order to help the poor be able to afford the fixed costs associated with car ownership, Ways to Work provides low interest loans (around 8%) that make purchasing and maintaining a car fit within the family budget. Client repayment rate was 87% between 1996-2007.