New program helps low-income people buy better cars

Two years ago Denise Lewis scraped together $500 for a 1996 Dodge Neon.

People complimented her on it. They said it looked spiffy, like new. But shortly after she bought the car, which is now approaching 200,000 miles, the transmission failed.

For many people this would have been a frustration for a day or two, but for Lewis it meant watching her car sit at the shop for six months, until she paid off the $1,200 bill.

"If that car goes down and you have no money, what do you do?" she asked.

That's the exact question Community Action Duluth is trying to answer with a new program called Jump Start Duluth, where low-income families can qualify for a low-interest, five-year loan and choose from good used cars with low mileage.

The program, to be announced at a press conference Thursday morning at Northern Communities Credit Union, is geared to help people get a dependable used car that won't saddle them with constant repair bills, organizers said.

Lewis, of Duluth, found out Tuesday that she was approved for a loan.

"I just was so happy. I almost cried yesterday when she told me the good news," Lewis said.

The program grew out of the Blueprint to End Poverty workshops and a 2007 United Way report, both of which noted the overwhelming transportation gaps for people who can't afford a good car.

"Again and again and again, what was noted was that transportation was a huge barrier," said Heidi Jaros, transportation advocate at Community Action Duluth.

To be approved for the five-year, low-interest loan from Northern Communities Credit Union, applicants fill out a detailed budget so the agency can be sure they have enough money to afford the payments, which will typically run between $100 and $200 a month, Jaros said.

This program is geared for people who have jobs but need some help with affording a good vehicle. "If they're not able to buy food or pay rent, this isn't going to work for them," she said.

Successful applicants choose a car from Ideal Auto, a nonprofit dealership in Glenwood City, Wis., that buys auction cars with fewer than 55,000 miles that get at least 32 miles per gallon. The cars are then sold to people in the program, typically for between $7,000 and $8,000.

The program also requires that participants deposit $20 a month into a savings account to cover oil changes, tires and other repair costs. Participants also attend a financial education workshop and get an auto maintenance lesson from Chad's Auto Shop or Fourth Street Auto Repair.