This video serves as a persuasive speech aimed at educating car buyers about the auto loan underwriting process. The speaker, Joshua Hulcom, explains how understanding this process can lead to better financial decisions and prevent buyer's remorse. He highlights key factors lenders consider and advises viewers on how to prepare themselves before purchasing a vehicle.
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This video serves as a persuasive speech aimed at educating car buyers about the auto loan underwriting process. The speaker, Joshua Hulcom, explains how understanding this process can lead to better financial decisions and prevent buyer's remorse. He highlights key factors lenders consider and advises viewers on how to prepare themselves before purchasing a vehicle.
Here is the verbatim transcript of the video:
Good morning everyone. My name is Joshua Hulcom. I work in lending and underwriting on a day-to-day basis and I'm here to talk to you about the last time you were buying your new car. You you went to the dealership. You got that new car smell. You had the feeling of empowerment knowing that this is going to be your vehicle soon and you were thinking to yourself how exciting it's going to be to show all your friends once that you get it. And then a few months later, you realize that your payments aren't lowering your principal that much and that higher rate and now you're realizing how long you signed this for and the vehicle's value is dropping, things like that. And now you're just stuck with this vehicle and you have all this regret. And I think that's one of the major things that's an issue here. A lot of people don't understand the auto loan processing and how that's the difference between a long principle that's going to be pushing your budget every time and making a good financial decision. And that's actually where underwriting comes in. So underwriting is how lenders look at you and determine how likely you are to repay this loan. TransUnion actually came out and said that there's three major things that they look at when your credit's pulled. Number one is going to be your debt to income ratio. TransUnion says 40% is the highest you should be. 30% is ideal. Next up comes to your vehicle's value. Some vehicles depreciate faster than others and lenders know this and just a little bit of research can show you a vehicle's value before you're buying because you may be buying over sticker, you may be buying under sticker and a lot of people don't know this. And the third thing is you as a person. So your employment, your address, everything like that plays an effect in this process. Nerve wallet says that 60% of people don't even check their credit before they go and apply for a loan. And that's crazy because just that one simple step can help you so much. So, what can you do? What is there to do in that time? Well, the solution is simple. You need to learn how underwriting works. And we're just going to break down those three key features right there to help you the next time that you're buying a car be more prepared. And being more prepared will get you that better financial future we're talking about. The first thing, let's talk about your credit score. Like I said, in their wallet said 60% of people don't check their credit score. That is a free asset right there. You can go check any of your major credit unions for free at home. And you can determine your debt to income ratio. You can determine a lot of major factors like how many payments you have and then what is your credit history. You can look at all those things. you can find those errors and you can get them corrected before you walk onto the dealer lot. All right, the next thing that we're going to talk about is understand your debt to income ratio. You need to understand what that means in entirety because there's a simplified version and there's a little bit harder version and you can figure out both with that free credit report I was talking about. If you make $100,000 a year and you have $30,000 in debt, that means you have a 30% debt to income ratio per year. That being said, excuse me. Uh that being said, you can make a couple extra payments and get down to that rate of 30% for a better look. And then I'm going to come to this last part. Get your documents ready. Go ahead and have insurance planned out. Go ahead and have your documents in hand like your proof of income. Go ahead and have your employment verification. Go ahead and have your proof of address. Have all that ready because that alone, the CFPB says, can add up to two hours to your underwriting time. So instead of you sitting and squirming, you can go ahead and have it and submit it with your main packet and have all of this knocked out. All right. So once you have your documents ready, you've checked your credit, and you know your debt to income, and you get it where you want, that's going to give you a better head start than your average car buyer. So let's go ahead and run through a couple scenarios here. You have two scenarios. There's that one person who's going to walk on the lot. So, person one walks onto the lot. They know they want this vehicle. They don't know what package they want. They don't know what the average cost to this is. They don't know anything other than I like that vehicle. That's the one I want. So, they sit down and they think that this payment sounds okay. They're not too sure. They just know they want this vehicle and they sign. And now they have a high interest rate. They paid over sticker and they have a depreciating vehicle. They did no major research when they found this vehicle. Then there's person two. They checked over their credit the night before and realized, "I need to make a few payments." So, they go ahead and knock their debt to income ratio down. They go ahead and research the vehicle and make sure that it's holding value. And they're doing all of this document gathering to make sure that they have it in hand when they go to the dealer. and that person leaves with a lower rate in their budget and they're happy with their vehicle and their monthly payment. So, that's the kind of buyer that you should be. You don't just walk in blind and guess, you just go in there prepared. That way, you can't be persuaded any other way that's the way that you want to go. So before your next car purchase, take a moment the night before and actually research the underwriting process. Actually look at what your specific creditor is going to pull and make sure that you're in the terms that you need to be to actually get this loan where you want. Make sure you have your documents in order. Go ahead and gather those and be the prepared buyer. Don't let the excitement of just owning something new be what breaks you for the next six to seven years because the average car alone, this is per Ford, the average car loan is around six to seven years. So this is a large Ford is one of the most major manufacturers. So that's going to be an average across the market. So six to seven years is the major decision. So next time that you're buying a car, just make sure you take the time and do this research. get those documents and actually make sure where you you're where you need to be before buying your car. Thank you so much for your time today and I hope you have a great one.
