Everyone needs a 2nd chance and if you have experienced financial hardship, then bankruptcy can give you a fresh start. A challenge that most Canadians face after going bankrupt is being able to secure a car loan.
Our Kitchener car loans team are going to show you how to get a loan even if you were recently discharged from bankruptcy. So, take a deep breath and let’s get going.
The first and most important thing is you must be discharged from your bankruptcy before you can get a Kitchener car loan.
This is a legal requirement set by the Government of Canada, the discharge is a document you receive once the bankruptcy is over. Your credit report will show the bankruptcy for the next 6+ years but aside from that, you will have a clean slate.
Establishing credit post-bankruptcy
You should get a secured credit card that can help you rebuild your credit without going into serious debt. The secured credit card requires a deposit from you and that deposit is used to set your credit limit.
This secured card is a starting point on your journey to rebuilding your credit. Make it a priority to always pay your credit card on time so your credit score will begin to rise.
Documenting your income
While working on rebuilding your credit, you will also need to make sure your income is from verifiable sources. There will be lenders willing to give you a loan post-bankruptcy provided you are able to prove you have sufficient income to service the debt.
If you are working a conventional job, your salary slips will usually be enough however, if you are like most Canadians with a side hustle then bring along your bank statements for the last year.
Finding the right lenders
You will not be able to find lenders online that offer car loans for Canadians that recently went bankrupt.
There will be advertisements posted online but the lenders that specialize in this type of financing do not advertise online, they have their channels for attracting customers (We will touch on this in a little bit).
The only way you can access these lenders is by visiting your local car dealership that specializes in helping credit-challenged borrowers.
After you have located the dealerships, you will need to fill out an application. The dealership will look at your credit and income profile to determine which lender in their network would be the most suitable prospect.
You should prepare yourself for a high-interest rate, these lenders are taking on a tremendous amount of risk and have to charge a high-interest rate to mitigate those risks.
The dealership will help you come up with a game plan whereby you take the high-interest rate car loan for 1-2 years until you have rebuilt your credit score.
Once your score is over 680, you can refinance the Kitchener car loan at a much lower interest rate.
Now that you know how to get a car loan after going through bankruptcy, you should contact your local dealership now and start enjoying life again.
For those of you who know that you have a challenging credit situation, please visit Dixie Auto Loans where we have a team of credit specialists ready to help you get approved for a car loan today!
For any questions or concerns, please don’t hesitate to contact us here!