Best way to buy a car in Hannon when you owe back taxes
Best way to buy a car in Hannon when you owe back taxes
Posted on September 14, 2022
Obtaining a car loan when you need one but owe money to the Canada Revenue Agency may seem nearly impossible.
The majority of conventional lenders won't grant you a loan for a car if you have debt to them since the CRA is a specific type of creditor.
Why lenders avoid dealing with borrowers who owe money to the CRA
If you owe someone money and fail to repay them, the person who is owed the money must go through a protracted and difficult process to try and recover their money.
They must employ a collection agency, file a lawsuit against you, receive a judgment, attempt to discover whether you have any financial assets, and then utilize the verdict to seize the assets.
The CRA is not required to go through any of that. Let's say the CRA believes you owe them money and you aren't making the required payments.
Then, since your bank account is connected to your social security number, they send a straightforward one-page fax to your bank, which they already know, and your bank accounts are stopped.
The CRA has the authority to attach any property you own, whether it already has a lien on it or not, in addition to freezing your bank accounts.
The CRA receives payment in advance of the initial lender if you have a mortgage on a home and owe money to it.
No traditional lender wants to work with someone who owes money to the CRA as a result. It's good news that you can still apply for a car loan, but there are a few requirements.
Make a plan to reimburse the CRA and stick to it
Although the government is often just, the law also requires it to collect all debts. This implies that your tax debt won't be cancelled.
Don't put off trying to find a solution to pay off your debt until your bank accounts are frozen.
Talk about your payment choices when you call the CRA.
They often want repayment of the debt within a year, but most will work with you if you are truthful and make an honest effort to clear your debts.
There should be no ifs, and, or buts about getting a written agreement from the CRA once you have a strategy in place for repaying your debt.
Increase your credit score as much as possible as fast as you can
You can now include those payments in your budget since you and the CRA have reached an agreement on a payment schedule.
Utilize this time to work on raising your credit score as much as possible.
Knowing that you can still pay all of your other debts despite owing money to the CRA will reassure your creditors.
How to obtain a vehicle loan despite having a debt to the CRA
Despite what other websites may claim, you must go via a nearby vehicle dealership to obtain a loan—at least a good loan—because you cannot do so on your own.
The dealership can negotiate the best interest rate for you while also outlining your condition to prospective lenders.
You should visit a nearby auto dealership right away if you need a car yet have CRA debt.
When you’re ready for a car lease or loan, get in touch with the Cambridge auto loan experts at Northway Ford for great deals on auto finance.