When It Comes to Car-Sharing If You Can’t Beat ‘Em Join ‘Em
Conventional wisdom tells us that if the motto of previous generations was that “good fences make good neighbors” the motto for the millennial generation is “share and share alike.”
Look around you and everything from bedrooms to clothes to cars is being made available by your neighbor for rent. Personally, it gives me the creeps, but my car is rarely neat enough to let anyone but my closest friends and family ride in it.
Will this trend impact lenders? I have written posts about how ride-sharing services like Uber pose risks for credit unions because, as the law currently stands, a car being used as a taxi isn’t insured in the event of an accident. Good luck getting that car loan paid back.
But there might be a way to not only guard against the sharing trend, but profit from it. Car-sharing poses insurance risks similar to ride sharing. An App is used to connect people willing to loan their car to people who need a quick rental. It’s taking off in cities — where it’s not uncommon to find residents who don’t own a car but who may need one in a pinch. Ford has started a pilot program with which it will offer a ride sharing App to people who need to rent a car for as little as an hour. It is available in Portland, D.C., San Francisco and Chicago. It’s targeting car buyers who obtained Ford Financing.
Here is the part that I find so clever. According to the American Banker, the project will enable Ford to examine the costs and benefits of car sharing and “augurs a future-not too far off-in which auto lenders take into account the revenue a vehicle’s car owner can generate by renting a vehicle.” In other words, my concern is that your collateral is being put at risk; but lending models are already being developed that may enable your credit union to make more loans to more members precisely because they participate in the sharing economy.
For the record, I am not convinced that the sharing economy reflects a fundamental shift in consumer habits. For my money, it simply reflects how desperate people are to squeeze every dollar they can out of this economy. I don’t care if you are 25 or 50, once you have a secure, well-paying job renting out your car to a total stranger looses its appeal. But, for now the sharing economy is alive and well and there are ways to capitalize on this trend.
Has a deal Really Been Reached With Greece?
If you have turned on the news this morning or read a paper you have heard that Europe had reached a deal to keep Greece in the group of countries that use the Euro. These headlines are entirely premature. By Wednesday, the Greek parliament must agree to a long list of austerity measures that sound just as severe as those rejected by the Greek voters a little more than a week ago. Maybe there is more in this for the Greeks than is being reported but, if not, we may very well be seeing the last act before Greece drops the Euro and jilts the world economy.