Walter has just found out he was denied his car loan because of his credit. He had his heart set on trading in his 2017 Dodge Challenger for the new Ford Mustang with all the options. His Challenger got appraised at the dealership for $13,000. He still owed $23,000 on his loan but Saul at the dealership said they would let him roll the difference into the Mustang loan. And by stretching the loan to 10 years, his monthly payment could stay the same at only $500 a month. He makes $1,500 a month after taxes and he is confident he could afford the payment as it is the same as he is paying today. So he said yes. However, once they checked his credit Saul came back with bad news. His credit score was too low and they could not approve the loan. So he drove home in his two year old used Challenger, dejected. Here is a list of what he owes and the interest rates. current required typical interest payment payment rate credit card or lender balance Credit Limit comments $ 1 Chase 2 Visa 3 Amazon 4 PayPal 1,000 $ 500 S 800 $ 2,000 $ 25 $ 25 S 35 $ 54 $ 35 25 35 70 25.2% $ 13.2% 5 26.2% $ 20.0% $ $ 1,300 only pays a day or two late 500 paying on time 1,000 pays when he can 2,000 pays extra late fees are adding up, 13,000 getting calls sChase W2 6 Personal Loan $ $ 13,200 7,000 $ $ 390 226 $ $ 100 226 14.5% $ 13.7% N/A working in public service and the loan will be forgiven in 2020. 7 Direct Student Loan 8 Dodge Loan $ $ $ 78,000 $ 111 $ 111 23,000 $ 500 $ 500 125,500 $ 1,366 $ 1,102 5.6% N/A 4.0% N/A 1-Was Walter's plan to get his dream car and not increase his payments a good idea in his situation? Why or why not? 2-Do you suspect that Walter is making enough to cover his expenses each month? Why or why not? 3-What are the two most impactful things Walter could do to start to improve his credit score? 4-If Walter receives a $5,000 bonus at work after taxes, and wants to pay down his debt,what debt or debts he should pay off first and why did you chose those? 5-Walter receives some unexpected back pay from a state where he used to teach chemistry and it was worth $70,000 with no taxes due. He wants to use the money to clear his Dodge loan and buy the Mustang in cash. Would you recommend he do that with the $70,000 or do something else? Explain what specific advice you would give him that would put him in the best position for his future. [EXTRA CREDIT possible for this question if answer goes beyond expectations)