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How to buy a car after going bankrupt in Ontario

How to buy a car after going bankrupt in Ontario

Posted by on Jan 04, 2022 - Archived under Uncategorized

In Canada, you need a car if you want to lead a normal life; this is not a “want” but a real “need.” This country is vast, and the public transit system will take decades before it can be a viable option.

 

If you went through bankruptcy and need a new set of wheels, these tips are going to help you get financing for your car.

 

When were you discharged from bankruptcy?

 

The law does not allow anyone who is in a state of insolvency to take on debt, so, unfortunately, we cannot help you until you have received your official bankruptcy discharge certificate; this is a document your bankruptcy trustee would/will give you.

 

When you have the official discharge, you can now hit the ground running. There are a few things you will need to do in quick succession to start rebuilding your credit.

 

Credit recovery 101

 

Most of us were never taught finance or credit in school, but we use credit every day. We spent more time in school learning how to play the recorder than how to protect ourselves from financial ruin.

 

There is a sophisticated calculation used to generate a credit score, but we are going to keep things simple.

 

The two biggest factors that impact your credit score are your repayment history and credit utilization. Since you were recently discharged from bankruptcy, your payment history shows negative remarks, which will weigh down your credit score.

 

Since you don’t have any credit at all, you need to open up some new accounts, but who will give you credit after you just went bankrupt?

 

We suggest signing up for a secured credit card; there are banks that provide these cars. Everyone who is legal age will qualify for a secured credit card, but you will need to deposit funds into the account to use the card.

 

This is not a prepaid card but a real credit card that will report to TransUnion and Equifax. Try to have a credit balance of at least $1,000 and use the car often but pay the balance in full to avoid incurring interest charges.

How to find a compassionate car loan provider

 

Anyone could end up bankrupt; there are reports that the average Canadian would have a difficult time finding $200 for an emergency without going into debt. There are lenders who provide car loans to individuals like you who have recently gone through bankruptcy.

 

You could get lucky and find one of these lenders online, but your best course of action is to contact car dealerships in your area that provide second chance financing.

 

The dealership will know which lenders will give you a car loan. These loans are classified as “high risk,” so you will be paying a higher interest rate; the dealership will structure the deal so you can refinance it to a lower rate once your credit score improves.

 

The great news is your credit score will improve, it just takes time, but in the interim, you will have a reliable vehicle to help you live your best life.

 

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! 

 

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