Increasing Mobility One Loan At A Time

Two New England credit unions are rolling out loan offers to improve mobility options for disabled consumers, including veterans, the handicapped, and more.

Digital Federal Credit Union ($9.9B, Marlborough, MA) and Service Credit Union ($5.4B, Portsmouth, N.H.) have each teamed up with Mobius Mobility to offer loans for the company’s Ibot, a prescription device similar to an electric wheelchair but that allows users a greater range of functionalities, including the ability to rise to eye level, go over curbs, uneven surfaces, and more.

Leaders at both institutions saw the Ibot in action at community events and reached out about forming partnerships, in part because they share similar geographies Mobius is headquartered nearby in Manchester, NH. With partnerships in place, Mobius began working with both credit unions to find ways to help those in need.

“Your average electric wheelchair is probably $3,500, but it has a short-term battery life, and it can’t do much,” says Caleb Cook, DCU’s vice president of consumer lending. “It can go on flat streets but is not really a mobility device for all-day mobility needs. It can get you from Point A to Point B, but if you come up on a curb, you’re kind of stuck.”

Although each credit union structures its loans differently, the commonality between the two is that neither is using it as a profit driver. Rather, the intention is to make the chairs as accessible as possible to those who need them, eliminating debt-to-income and FICO score requirements while partnering with nonprofits that can provide down payment assistance and more.

Mark O’Dell, vice president of lending at Service, says one of the directives from Mobius was to make the loan process as simple as possible.

“There’s a ton of red tape for people to go through,” O’Dell says. “You have to have a prescription to even pursue this product. There’s a lot of hoops to jump through and [Ibot inventor Dean Kamen] didn’t want financing to be another hurdle. We aren’t going into this thinking this is going to be a big loan production opportunity for us to grow membership this was fulfilling a specific need.”

According to O’Dell, some borrowers need a cosigner to secure a loan because the devices average $40,000 thanks, in part, to the wide variety of features that come with the chair as well as the fact no two chairs are exactly the same.

“Individuals have to get fitted for a chair,” O’Dell explains. “It’s a custom seat based on the weight and the needs and the type of disability the user may have.”

The devices can only be fitted at Mobius’s New Hampshire headquarters for now, O’Dell adds, so there is some travel and lodging involved, but the credit union is willing to wrap some of those costs in with the loan.

Part of the need for the loans comes from the fact that the high cost of the devices has resulted in some would-be users getting being priced out. And unlike traditional or electric wheelchairs, insurance and government aid don’t yet cover the costs of these. Mobius is working to get them covered under Medicaid, but that process is arduous and uncertain.

Lucas Merrow, CEO of Mobius Mobility, says one problem the company continues to deal with is that Medicare and private insurers often only reimburse for basic wheelchair products that cover daily living inside the home. So products that come with a higher price tag but provide a wider range of mobility options are often overlooked in favor of cheaper, more basic options.

“Medicare doesn’t want to reimburse a beneficiary for anything other than being mobile inside the home, which is kind of absurd in 2022, given the advances in technology and robots,” Merrow says. “Not to say you can’t get reimbursed, but you can only get reimbursed to the extent that a comparable product could get someone around inside a level apartment.”

There isn’t much competition for these loans right now, and DCU and Service are believed to be the only two institutions offering them.

“If we do a dozen [Ibot] loans this year, that’s great,” Cook says. “We’re not pricing it for the risk; we’re not worried about that. If we have to, we’ll work with those folks to do the right thing.”

Neither credit union has an Ibot loan in the pipeline yet, but executives chalked that up to the long lead time associated with the product, including working with insurance providers, seeking any available assistance from nonprofits, being fitted for the devices, and more.

“We can do the loan real quick, but the sales cycle from getting someone pre-screened to getting them in a chair is about three months,” Cook adds.

Although mobility is a chief component of the devices, there’s far more to it than just getting around, emphasizes O’Dell.

“It’s about dignity,” he says. “To say it’s a wheelchair is like comparing a bicycle to a car. They’re just two different things. It’s exciting to be partnering with this kind of company that can make such a difference in people’ lives.”

Expanding Access

Leaders at both Service and DCU say they expect most interest in Ibot loans will come from outside their institutions’ current membership and possibly well outside their geographical footprint but the product lines up with an existing offering at DCU.

For more than a decade, the credit union has offered a suite of access loans designed to serve disabled consumers. Those range from stair-climbing chairs to rehabilitative equipment, home modifications, vehicle conversions and beyond.

That program was born out of the strong demand the credit union saw to cover costs for things such as vehicle conversions. In those instances, DCU offers loans for not only the cost of the vehicle but also for costs associated with the conversion — everything from adding hand controls to reconfiguring seating arrangements, and more. Those additional fees can add as much as $10,000 to the cost of the vehicle, so DCU allows for longer terms with a slightly higher interest rate, which helps protect the credit union since those vehicles are particularly difficult to unload at auction should a repossession be required.

DCU initially channeled some of those deals through indirect lending, but Cook says DCU shifted its focus to direct in part because of high dealer fees. The shift has worked. Existing members and potential members come to the credit union for financing through its website, which includes a specific page focused on access loans, along with online applications.

“They can click ‘apply now,’ and go through a regular car loan process,” he says. “We underwrite it and try to get them approved just like a car loan.”

Although exact numbers were not available, Cook says DCU has made thousands of mobility vehicle loans and several hundred access loans for items such as wheelchair ramps and in-home medical devices.

“It is not a huge book of business compared to our core products like credit cards and auto and personal loans,” he notes. “The volume of business has been pretty consistent over the years, although our access loans did see a decline over the past several years as rates in general were very low, so there were other affordable options such as cash-out mortgage refinance, low unsecured rates in general, and the emergence of buy now/pay later options.”

Because comparatively few lenders focus on the disabled market, many members have returned for additional loans for new services over the years, Cook adds. While those loans have affordability requirements, the underwriting is designed to be as flexible as possible. Lenders generally consider debt-to-income ratios, annual income, and unsecured debt levels.

“Access is an umbrella term for any access need you have when you’re disabled,” Cook says. “It could be a wheelchair or a van, it could be in-home medical devices that are expensive, it could be custom modifications to your house. We’re pretty loose as to what we consider an access loan.”