How to get a car loan after a consumer proposal

How to get a car loan after a consumer proposal

Posted on September 21, 2022

A consumer proposal is a financial tool used by insolvency trustees in Canada to help their clients rearrange their debt obligations.

Unlike a bankruptcy which wipes your debts out with a profound impact on your credit score, a consumer proposal is not as damaging to your credit score.

Essentially, your insolvency trustee is going to propose new repayment terms that consist of lower payments over a prolonged period of time.

In order for a consumer proposal to be accepted, 51% of your debtors must agree to the proposal; most creditors will accept it because it is better to get some money than no payment at all if you elect to go through with the bankruptcy.

Steps to take when trying to get a car loan after a consumer proposal

Technically and legally speaking, you are not allowed to take on any new debt while in a consumer proposal without the expressed written consent of your insolvency trustee.

We are going to work on the presumption that you have completed the consumer proposal and have received written confirmation from your trustee that the terms and conditions of the proposal have been satisfied.

You will need to start rebuilding your credit score, which took a major hit due to the consumer proposal.

Some of the steps you will need to take are simple to follow, but you will need some stick with them, which takes discipline.

• Sign up with Credit Karma and Koho for free access to your credit report. These services give you real-time access to your credit report. Along with having access to your credit report, these services will also recommend various financial products that, based on your credit score, you stand a good chance of securing.
• Sign up for secured credit cards being offered by Capital One
•  and HomeTrust. You will not be able to get a conventional credit card until you have re-established your credit score and the only way you can do that is with a secured credit card.
• When you have these secured cards, use them for routine purchases but make sure you pay the balance in full every month; otherwise, you will find yourself back in serious financial trouble.

After a few months of using these secured credit cards, your credit score is going to start to rise.

Once your score is in the 600 range, you can qualify for a decent car loan. If you are able to wait until your score is 720 or higher, you will qualify for the most competitive car loan interest rates in Canada.

How to get approved for a car loan today with a consumer proposal

You probably need a car right away and don’t have the luxury of time to wait until your credit score improves.

There are options available, but you cannot go it alone; you should try to work with a car dealership in your area that has experience in assisting drivers who were recently discharged from bankruptcy and consumer proposals, these dealerships will be able to get you approved, but you need to make the first move and contact them.

When you’re ready for a car lease or loan, get in touch with the Waterloo auto loan experts at Northway Ford for great deals on auto finance.