Buying a Car during a Consumer Proposal: Exploring Car Loan Options

^{By Bromwich+Smith Staff | 1324 words | Reading Time: 7 minutes | Last Update: 2023/06/23}

Consumer Proposal Car Loan: Is It Possible? 

Good credit is one of the most important building blocks to a happy and wholesome lifestyle. Not only does it impact you financially, but it also plays a role in your overall wellbeing and stress management. 

However, far too many individuals or families have had or are now facing the stress of a debt-burden that has affected their lives and their ability to obtain credit. Do you know what credit do you need to get a car loan? If you have had or looking at filing an insolvency in Canada (bankruptcy or consumer proposal), can you still apply for a loan? More specifically, can you get a car loan while in consumer proposal? 

Simply stated, Yes! You do qualify for a car loan during your Consumer proposal. A consumer proposal car loan is an option to consider, though there are other things to consider.  

Turning your life around from a financial crisis can be one of the hardest things to experience. But for many, having a car is a necessity to getting to work and other family matters, making it an essential to maintaining your lifestyle. 

Will my credit impact my ability to finance a vehicle?  

Did you know that financing a vehicle is one of the strongest credit rebuilding tools? Debt consolidation via car loan is possible! The stigma attached to poor, or damaged credit unfortunately leads far too many people to accept, or be pressured into settling for high-interest loans with promises of lower rates in 6 to12 months. In reality, you can get a car loan while in a consumer proposal which allows to rebuild your credit without worrying how you and your family members will get from point A to point B. Don’t fall into a trap – there are FAIR options for you to buy a new or used car with bad credit!  

Can I get a car loan during my Consumer Proposal?   

Many Canadians who call inquiring about debt relief ask the same questions. Can I get a car loan while in a consumer proposal? What are my options of getting a car after paying a car loan during a consumer proposal? 

These are common questions that come with simple answers if you talk to the right professional! Start by ensuring the information you are provided comes from auto finance brokers experienced with car financing for bankrupt or proposal clients. They will know the best lender(s) to secure an approval for you. Typically, a finance manager in a dealership will “shot-gun” your application to every lender possible – further damaging your credit score, and likely resulting in a decline. Bromwich+Smith works with business partners across Canada, who are able to help you securing a reasonable car loan during your consumer proposal. 

The Benefits of a  Car Loan Rebuilding Credit during a Consumer Proposal 

A car loan can be a powerful resource in rebuilding your credit during your consumer proposal.  With a secured car loan, and showcasing regular payments being made on time you can show that you are able to handle additional credit. This shows that you are able to make payments, and will build your credit history in a positive light.  
 
By having loans with set payment dates, it helps you to create healthy financial habits, including budgeting, payment history and living within your means. It is important to look at the full picture and weigh the benefits and downsides to taking on additional credit during your consumer proposal. Talk to your Licensed Insolvency Trustee for guidance based on your specific situation and obtain the information you need to make the best informed decision possible.  

Exploring Debt Consolidation Car Loans Buying a Car with Bad Credit 

How to buy a car with bad credit? Bad credit can be turned around with a debt relief program, and an auto loan can be a big part of this. It starts with accepting this as a transition period so the right vehicle for the individual or family should address meeting the needs, but equally important as the vehicle is that the payment is not a stretch to the budget. 

Many of the major banks and auto lenders offer fair rates that present the best opportunity to rebuild credit, in addition to providing a loyalty program that rewards perfect payment history with lowered rates in the term. This presents the opportunity to upgrade your vehicle with re-established credit. 

Qualifying for Car Financing during a Consumer Proposal   

Qualifying for car financing while in a consumer proposal insolvency can be challenging, as your lender will be looking at your credit history to determine your creditworthiness.  However, it's not impossible and knowing what your lender is looking for will give you a step up during this process. 

1. Understand the consumer proposal process: Before obtaining any new credit or debt, make sure you understand the terms and obligations of your consumer proposal. Speak to your Licensed Insolvency Trustee with any questions you have.  

2. Rebuild your credit: Do not wait until your consumer proposal has been completed, start rebuilding your credit early on. Make all your payments on time and in full. This will show your future creditors that you are capable of making payments, and will build up the trust they have in your ability to repay loans.  

3. Create your savings: Lenders may be more willing to provide car financing if you can offer a larger down payment. Securing money for a down payment shows commitment and reduces the risk for the lender- which makes you an ideal client for them. 

4. Research lenders who work with individuals in insolvency: There are some lenders who specialize in providing car loans to individuals with poor credit or insolvency histories. They will be more likely to work with you, and may have more lenient terms without increasing interest rates.  

5. Consider a co-signer or guarantor: Having a co-signer or guarantor with good credit can increase your chances of getting approved for a car loan. The co-signer or guarantor will be equally responsible for the loan if you fail to make payments so this may not be an option for everyone. Consider if this is something you are comfortable asking loved ones for but be prepared that you may not be able to secure a co-signer.  

6. Compile your documentation: Be prepared with all of your documentation which will include proof of income, proof of residence, and any documents related to your consumer proposal. Be fully truthful about your past history and showcase the steps you have made and proof that you will not fall into past debt again. It may be difficult to be vulnerable with others, but by sharing your story will show to your potential lender that you are honest and want to work with them.  

 

Each lender will different eligibility criteria and policies, fees and interest rates etc, which is why it's crucial to shop around and compare options. Do not feel like you need to accept the first offer due to your past financial situation. Our goal is to help you avoid lenders who take advantage of borrowers.

Making informed choices for your financial future is fundamental to rebuilding your worth and credit history. Researching different lenders, comparing interest rates, and understanding the impact on your credit score are key steps to take during and after your Consumer Proposal. By taking the time to learn all of your options, you will be making informed choices, ensuring that you can secure a car loan that aligns with your budget and future goals.

Your current credit profile does NOT define you – bad credit auto loans can be a way to take you from zero to hero and improve your credit-worthiness. Make smart, informed choices not only on your next vehicle, but also your auto finance broker to ensure they care as much about your credit as you do! Contact us for more information on consumer proposal car loans today.  Reach out today for a free, confidential, no obligation consultation. Bromwich+Smith’s Debt Relief Specialists are available by phone at 1.855.884.9243, or request a call back at contact us page.