Credit Enhancement Strategies for Higher Efficiency Vehicles in Maine

Erin Brown, University of Maine - Main
Jonathan Rubin, University of Maine - Main
Bruce Wyatt, University of Maine - Main

Abstract/ Summary

Credit enhancements are a necessary, but not sufficient policy tool to expand access to clean, reliable vehicles. They are necessary because lower-income and historically disadvantaged groups have less access to low-cost financing. They are not sufficient in that credit enhancements alone, while helpful, are not likely to substantially increase the purchase of clean, reliable vehicles with a higher initial purchase price, but comparable or lower long-term cost of ownership. We review two credit enhancement mechanisms: loan loss reserves and interest rate buy-downs.