388 King George Rd, Brantford, ON, N3T 5L8
My Garage

What you need to know about getting a car loan after bankruptcy in Canada

What you need to know about getting a car loan after bankruptcy in Canada

As inflation pushes the Canadian economy toward a recession, the number of Canadians that will file for bankruptcy will increase dramatically.

If you need a car loan and were recently discharged from bankruptcy, it can seem like an impossible task to find a creditor willing to give you a second chance.

Stick around with us, and we are going to show you the steps you need to take to get back on a solid financial footing.

The emotional toll bankruptcy takes is real

Something that few people discuss is the emotional toll a bankruptcy can take on a family.

Having your items repossessed and being forced to live on a meager sum of sum for up to two years can lead to significant anxiety and emotional strain for married couples with young families.

You need to realize that going bankrupt does not have the negative social stigma it once did; you are getting a fresh financial start, so leave the past in the past.

How to rebuild your credit from scratch

The first thing you need to realize is that bankruptcy wiped out all of your debts, but it left a negative mark on your credit score.

This can stay there for up to seven years.

Since you will not be able to get a conventional credit card, you need to apply for a secured credit card from Home Trust and Capital One.

These secured cards work just like a normal credit card, with the only difference being your need to deposit funds into a special account.

The funds are used as collateral and work as your credit limit; if you deposit $1,000 into the account, then you have a revolving credit limit of $1,000.

If you use the credit card and pay the balance in full every month, your credit score will start to increase, and you will qualify for a conventional card in a few months.

Making sure you can afford a new car

Something that you would have covered during your bankruptcy experience is how to prepare a budget.

Since the majority of your debts were discharged, you should have a considerable amount of room in your budget that can go towards paying for a new car.

As a rule of thumb, you should allocate $500 per month to cover your car loan payment.

This amount doesn't factor in the cost of fuel; if you can afford to buy an EV, you should seriously consider getting one since gas prices are all over the place in Canada.

Finding the right car-buying solution for you

There are websites that advertise bad credit car loans, but you need a personalized approach.

Go to a dealership in your area, one that specializes in helping buyers who had credit challenges in the past.

By working with these dealerships, your chances of getting a new car today will increase dramatically.

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

Categories: Car Loan

Tags: ,