Organizations collaborate on auto loans for credit-challenged drivers

Katie ArnoldJP In The News, News, Other News

From the Illinois Business Journal.

Illinois Business Journal
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Justine PETERSEN and NISA Charitable Fund are partnering to address the impact of high-interest car loans for drivers in Greater St. Louis and Southern Illinois with challenging personal credit scores.

Justine PETERSEN has launched a pilot, auto loan refinancing program called DRIVE with wrap-around financial credit counseling with the support of a $250,000 investment from NISA Charitable Fund.

“Research shows that those with subprime credit in St. Louis are paying an annual interest rate of approximately 20 percent for their auto loan, which consumes a disproportionate share of their monthly income,” said Robert Boyle, founder and CEO of Justine PETERSEN, a national credit-building organization and a community development financial institution (CDFI).

Boyle added: “Low- to moderate-income households can stretch their dollars if they work with a CDFI to rein in their high-interest auto loans and participate in a comprehensive credit counseling program. With NISA Charitable Fund’s vital financial and operational support, the initial results of our pilot program are encouraging, and we hope to expand our partnership base and participant pool during the second half of the year.”

The DRIVE pilot program enables selected participants to refinance their auto loan at an annual interest rate of 6 percent, representing significant monthly savings.

Individuals also receive a personalized credit action plan to help repair their credit score. Recently, Katherine Faulkner, a DRIVE participant, refinanced her car note with a DRIVE loan, lowering her annual interest rate from 20.35 percent to 6 percent, saving over $120 per month.

“It was a great change for the better,” Faulkner said. “I have the joy of knowing that I am no longer paying all of that interest on my loan, and now I have more money in my pocket to meet my other monthly expenses.”

“This is precisely the type of meaningful impact we want to achieve in our collaborations with community organizations in St. Louis,” said David Eichhorn, CFA, NISA’s CEO and head of Investment Strategies. “Our work with Justine PETERSEN is about yielding tangible, scalable results and remaining true to NISA Charitable Fund’s mission to support organizations that are improving access to capital among traditionally underserved groups in St. Louis.”

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