A significant number of Canadians have filed for consumer proposals. If you are in a consumer proposal, you cannot legally take on any debts without permission from your trustee.
We are going to work on the premise that you are looking to buy a car after a consumer proposal. A consumer proposal is designed to give consumers a second chance, so be proud of yourself for completing it.
Credit rebuilding 101
Your score will be low in a credit proposal, and the proposal will stay in your credit report for the next seven years. We cannot change the past, but there are some tips you can follow to quickly rebuild your credit.
Open a few secured credit cards
You need to apply for a few secured credit cards. This is vital to your credit rebuilding journey. There are banks like Capital One that have secured credit cards.
Open at least three (3) cards, so you will have multiple trade lines. The more accounts that you have, the faster your credit score will climb.
Sorting out your income
After you have opened a few secured credit card accounts, the next step is sorting out your income. You will find lenders that provide loans to borrowers who recently went through a consumer proposal.
These lenders tend to focus more on your income than your credit score. Your income needs to be stable and easily verified. The consumer proposal would have eliminated most of your debts, so you should have a considerable amount of room in your budget to put towards a new car.
Self-employed borrowers will need to provide their tax assessments and banking statements. If you are working a conventional job, give a couple of your pay slips.
In either case, you will need to give a copy of your consumer proposal discharge documents.
Setting clear expectations
The average price of a new car is close to $50,000, so realistically you will not get a loan for a new car. However, most consumers who just completed their consumer proposal will qualify for a used car, so don’t feel discouraged if you cannot get a brand new car right away.
There are many wonderful used cars available, but you will need to find the right dealership.
Finding the right dealership
When trying to buy a car after a consumer proposal, you’ll will need to find a local car dealership that offers 2nd chance financing. When you have identified the local dealerships, you can start reviewing the various car loan options that are available.
The dealership will have many lenders that provide these second-chance loans. These lenders do not advertise on the Internet.
Something the car dealership will do is structure your loans in such a way. You will be able to refinance your car loan at a lower interest rate once your credit score rises.
Thanks to these suggestions, you can rebuild your credit and get a new car. Just remember to stay on top of your finances, and you will never have to go through a consumer proposal 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 buy a car after a consumer proposal today!
For any questions or concerns, please don’t hesitate to contact us here!