Answer: Adding an installment loan such as an auto loan, mortgage or student loan to your credit mix can indeed help rehabilitate troubled scores. But it’s advisable only if you’re well on your way to having the rest of your debt paid off. Otherwise, you risk stalling on your debt repayment or — worst-case scenario — adding another bad debt to the pile.

If your scores are still troubled, the car loan probably has sky-high interest rates. If you go this route, put down at least 20% of the purchase price so that you can refinance to more favorable terms in a year or two when your scores improve.

A better option may be to skip the car loan and try to get a three-year personal loan from your credit union. This fixed-rate loan would allow you to pay off some of your other debt while improving your scores.

Once your debt is paid off, you can save up to either buy your next car with cash or at least make a substantial down payment so you have to finance only a portion of the purchase.

Finally, you should know that although using and paying off your credit card is definitely helping your scores, paying off old debts may not be so helpful to your numbers. If the bills are already in collections, you may not see dramatic improvements in your scores as you retire those debts. That’s why you would be smart to look for other means to improve your scores.

Answer: Predicting future inflation is pretty tough and depends on a number of factors. Right now, for example, many used-car models are fetching significantly higher prices than in the past because of the sharp decline in sales of new models during the recession (leading to fewer available used cars now) and the fact that many owners are hanging on to their cars longer to save money. The production slowdown in Japan after its recent disasters is also affecting used-car prices.

Since predicting inflation is tough, you’d be smarter to focus on the factors you can more easily control: your savings and the condition of your current car. With proper maintenance, today’s vehicles can notch well over 200,000 miles. Owning a car for 10 years or more gives you plenty of time to save up cash to buy your next vehicle.

Answer: When a lender charges off a bad debt, the debt itself doesn’t disappear. The lender is simply declaring that it doesn’t think it will be able to collect. The debt can be sold to collection agencies, which can post the collection account on your credit reports.

The charge-off is what typically does the most damage to your credit scores, although the collection accounts increase the toll.

There are limits to how long creditors can pursue you in court over debts. The limits vary according to each state’s statute of limitations. There is also a limit on how long bad debts can show up on your credit reports (typically seven years and 180 days from when the account first went delinquent).

But debts only disappear when you pay them or have them legally erased in U.S. Bankruptcy Court.

One of the things you should learn from this experience is not to trust a lender to tell you how much you can afford to borrow. The other is that you should always arrange financing in advance before you venture onto a car dealership lot. If the dealership can beat the deal you get from your bank or credit union, great. Otherwise, you’ve got financing you know you can afford.

Answer: You reaIly need to talk to your bankruptcy attorney to see what your risk might be. If you “reaffirmed” the loan and promised to keep paying it, then the lender may be able to sue you for the difference between what you owe and what the car is worth.

In many cases, the best way to deal with an “underwater” vehicle — one that’s worth less than you owe — is to “drive out of the loan” by continuing to make the payments until the obligation is paid off.

Then you should continue to drive the car for a few more years while you save up enough cash to buy your next car, or at least to make a big down payment so that you’re not underwater.

The fact that you want a better car is really no excuse for reneging on your commitment. By the way, you wouldn’t be “returning the car to the lender.” You would be agreeing to a voluntary repossession, but that doesn’t get you off the hook. In most states, lenders can indeed come after you for the difference between what a repossessed car is worth and what you owe.

Sometimes, bankruptcy is inevitable when people are facing insurmountable debt. But you took the wrong lesson from yours: Instead of realizing you needed to change your financial habits, you seem to think there’s a “get out of jail free” card when it comes to debt.

Answer: An installment loan such as a car loan can indeed improve your credit scores as long as you make the payments on time and don’t overextend yourself. Clearly, though, this purchase will have to wait until you’re back home, since any credit you get abroad won’t help your credit scores in the U.S.

While you’re waiting for your scores to improve, you can build up your savings — real estate investors need a fat cushion to cover down payments, repairs, maintenance and vacancies — and learn more about the skills you’ll need to be a successful investor. You don’t need to waste your money on expensive seminars, since everything you need to know is available in bookstores and libraries. One book to get you started is “Real Estate Investing for Dummies” by Eric Tyson and Robert S. Griswold.

Answer: You might want to take a look at the contradictory attitudes you just expressed.

You have a car loan, which means you’re in debt and pay interest to a lender. But you refuse to get a credit card, which can help you build your credit scores without having to incur debt or pay a dime in interest.

Having a credit card does not make you a slave to lenders, unless you’re stupid enough to carry a balance. On the contrary: It can help you build your credit scores to the point where you’re in the cat bird seat, being pursued by mortgage lenders eager to give you a great deal.

If you absolutely can’t trust yourself to have a card without carrying a balance, then of course you should forgo plastic. Otherwise, you could use a card like the helpful tool it can be, charging small amounts each month and paying the balance off in full, to boost your credit scores over time.

Is there any way to clear this up, or does a good turn remain unrewarded — and for how long?

Answer: The phrase you’re looking for is “No good deed goes unpunished,” and cosigning a loan for someone who doesn’t make the payments is a punishing experience indeed.

There is no way to clear up this mess. You put your good credit in your friend’s unworthy hands when you cosigned the loan. What’s more, since you had good credit and your friend didn’t, each late payment actually hurt your credit scores more than they hurt his.

If the loan has been paid off, your friend won’t be able to do further damage to your credit, but it will take a while for your scores to return to their old levels. The late payments will remain on your credit report for seven years, although their effect will fade over time if you handle the rest of your credit responsibly.

If the loan is still outstanding, you might want to seriously consider paying it off so that your friend can’t inflict fresh injury on your scores.

Normally we buy used, but the kind of car we want is not readily available as a gently used vehicle because people tend to keep this type of car for a long time. Also, the resale values tend to be high, so if we do find one that’s just a few years old, it’s likely to cost more than what we’ve saved so far.

Might it be a better idea for us to buy a new version with dealer incentives, such as low-rate financing, rather than continue searching for a used version to buy with cash?

Answer: You’ll save a lot of money over your lifetime if you use cash to buy cars that are a few years old and then drive them for at least 10 years.

Buying used avoids the steep depreciation that erodes new-car values as soon as you drive the vehicle off the dealer’s lot. Not replacing cars frequently also saves you money and gives you time to build up cash for the next purchase.

The problem with financing cars is that it can encourage you to buy more vehicle than you can really afford. Before you let dealer incentives sway you, check out car comparison site Edmunds.com’s “True Cost to Own” feature. This handy guide shows you all the costs of owning a vehicle, including insurance, maintenance and repairs. In many cases, the true cost of owning a car is double, or more, the monthly payment.

That’s not to say you can never buy new or never finance a car. But you should make sure it really fits your budget, and put strict limits on your spending (because lenders certainly won’t).

If you’re going to finance a car, put at least 20% down — more if possible. Limit the loan to no more than four years, and make sure the payment doesn’t exceed 10% of your gross income. A 5% limit is better for those with considerable mortgage payments or other debt.

The reason you buy used is to avoid the big, initial loss in value from the depreciation that happens as soon as you drive a new car off the lot.

But now those who have followed this advice have a one-time chance to upgrade to a new car without feeling any tightwad guilt.

That’s because the cash-for-clunkers rebates of up to $4,500 will offset most if not all of the depreciation from buying a new vehicle.

So if you’ve been rattling around town in a jalopy that gets 18 miles per gallon or less and you can afford to buy a new car (either with cash or a loan that lasts four years or less), now may be the time.

The rebates only apply to the purchase of new vehicles, and there are other restrictions. CLICK HERE to visit Cars.gov, the government’s official Cash-for-Clunkers site.

For more on smart ways to buy and own cars, read:

• Make your car last 250,000 miles
• 16 favorite money rules of thumb
• High-tech cars mean high-priced repairs
• The real reason you’re broke

The survey, conducted by Braun Research, found that:

• More than half of those surveyed (52 percent) said their parents have not discussed budgeting for car expenses
• 64 percent say their parents have not talked to them about financing options
• More than half (56%) expected to finance their purchase, and nearly 82 percent of car buyers were aware that their credit scores could impact the interest rates they would be offered. Yet a whopping 72 percent of those who planned to finance their first car purchase had never checked their credit reports or credit scores.

Capital One’s findings are based on an online survey conducted by Braun Research of Princeton, NJ., which completed interviews with 404 parents between 45 and 55 years of age, all of whom have at least one child and own a motor vehicle. Braun Research also interviewed 400 young adults between the ages of 18 and 25 years of age who are planning to buy their first motor vehicle in the next year. The interviews were conducted between May 1, 2009 to May 13, 2009. The margin of error for this study is ± 4.9 percentage points for each group.

Now, it’s entirely possible your parents aren’t the best source for information on the car purchasing process, given how many older people overspend on cars. But if you’re going to borrow to buy a vehicle, you darn well better understand what you’re getting into.

That means:

• Knowing your FICO scores (available for about $16 apiece at MyFico.com) and what interest rate those should get you
• Setting your own limits on how much you will borrow (preferably making at least 20% down payment, with a loan no longer than four years and a payment of no more than 10% of your gross income)
• Getting approved for a loan first at your local credit union, so that you don’t have to rely on dealer financing (but you can still take advantage of a better deal, if the dealer offers one)

For a wealth of information on negotiating a car purchase, check out Edmunds.com and see these columns for more financial tips:

• 7 fast fixes for your credit scores
  
• Should you buy from a dying automaker?
• What a car wreck could cost you