New program lets low-income people refinance high-interest auto loans

So far, Justine Petersen has taken out seven loans to refinance high-interest auto loans totaling $92,411, for an average loan size of $13,201.

ST. LOUIS — Low-to-moderate income residents of the St. Louis area are tapping into a new loan fund created by a community development financial institution to refinance high-interest auto loans.

The NISA Charitable Fund provided $250,000 for the program, which is administered by Justine Petersen Housing and Reinvestment Corp., a nonprofit group. The Drive pilot program, which began lending last month, also includes financial counseling to help repair credit scores.

“Research shows that those with subprime credit in St. Louis are paying an annual interest rate of about 20% on their auto loan, which consumes a disproportionate amount of their monthly income,” said Robert Boyle, Founder and CEO of Justine Petersen, in a written statement, referencing a St. Louis Fed study.

The program allows selected participants to refinance their car loan at an annual interest rate of 6%, representing significant monthly savings, said Galen Gondolfi, Chief Strategy Officer at Justine Petersen. The program is also designed to help people build assets, he added.

“It’s this idea of ​​hanging on to the credit report and the credit score, increasing that score, and transitioning the customer to traditional finance – not just for a future car purchase, but also for the home ownership,” Gondolfi said.

So far, Justine Petersen has taken out seven loans to refinance high-interest auto loans totaling $92,411, for an average loan size of $13,201.

Katherine Faulkner, a North St. Louis resident, refinanced her car bill with a Drive loan, lowering her annual interest rate from 20.3% to 6%, saving more than $120 per month.

Click here for the full article from the St. Louis Business Journal.

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