Interview With John Wedding of Mighty Bargain Hunter

Can you buy a used car with no down payment?

Yes. I know that I was able to borrow the full amount from my credit union for the purchase of a used car. I didn’t though; I made a down payment to reduce the size of my loan.

If a down payment is needed, how much of a down payment should the customer provide?

It is prudent for a customer to make as large a down payment as is reasonable for them. It reduces their loan balance from the start, and ultimately decreases the total amount of interest they pay. A customer should consider the amount of the down payment in light of their overall finances. (It may not be wise to drain savings just for the sake of a big down payment.)

If you’re divorced and as a result of that divorce have bad credit, what tips would you offer the customer on how to obtain a loan?

Continue to clean up any credit ties with the former spouse, which involves closing as many joint accounts as possible, and working with creditors to separate the debt cleanly. A divorce doesn’t change agreements with creditors; they still expect to be paid back.

In the long term, work on developing a good credit profile. This will make every kind of loan less expensive and easier to get. In the short term, options may be fewer and more expensive. In the really short term (if necessary), investigate other modes of transportation, and start saving for an inexpensive car. Another possible option (though not for everyone) is to look for work closer to home so a car isn’t necessary to get there.

If a customer has just declared bankruptcy and they want to buy a vehicle, what do you suggest they do?

Treat the process seriously. Get credit reports from Annual Credit Report.com to see what potential lenders will see. Try to gather a down payment to reduce the risk to the lender. When shopping for a vehicle, try to do the shopping on a single day to minimize the effect the credit pulls will have on the score. And of course, when you get the loan and car, make the payments on time!

Should a customer bring any documentation with them before they walk into the car dealership?

Yes. If the make and model of the vehicle being considered is known, then an insurer can provide a banner page that indicates the cost of insuring the vehicle. Bring any loan pre-approval paperwork from another lender so that you’ll know what you have lined up already. Bring your driver’s license and existing proof of auto insurance. Also bring in any down payment.

If you’re trading in a vehicle, bring the certificate of title, proof of registration, owner’s manual, and information on the loans against the vehicle, if any. (And, of course, the keys!)

How long does the credit restoration process take?

It takes a record of on-time payments and good debt management to rebuild credit, and that doesn’t happen overnight for anyone. Since the formulas that go into credit scores are proprietary, it’s hard to know exactly how long it will take to get a score from X to Y, but a good rule of thumb to go from bad credit to good is a few years.

Should a customer run their credit score prior to walking into the dealership?

It’s a good idea to know what’s on the credit report prior to going into the dealership. Pulling the credit report and score excessively just before applying for a loan can reduce the score a bit temporarily so it’s not a good idea to do it unnecessarily.

This article was written by John Wedding from Mighty Bargain Hunter, from Mighty Bargain Hunter, who likes to help people recognize life’s good deals.

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