How to secure a car loan after going bankrupt in Canada

Posted by on Aug 24, 2022 - Archived under Bad Credit Car Loan Tips

Going through bankruptcy can give you a new financial lease on life, but there are some very distinct challenges that you will need to prepare yourself for if you want to get back on a solid footing.

One of the challenges you are going to face is being able to secure any type of unsecured financing after you have been discharged from bankruptcy.

What you will need to do is come up with a game plan so you can hit the ground running once you have been discharged from bankruptcy.

When were you discharged from your bankruptcy?

The first thing you need to address is when were you discharged from bankruptcy. By law, you cannot take on any new debts until you have received the official discharge.

Once you have received the discharge, you will need to start work on building your credit score back up.

How to rebuild your credit score safely and quickly

There are gimmicks being offered online; they promise to raise your credit score for a trivial sum.

These services do not work, so keep your money and stick with this approach which is guaranteed to work.

You should sign up for a secured credit card from both Home Trust and Capital One. You are guaranteed approval with these cards.

When you receive these cards, you need to make your payments on time like you would with a conventional credit card.

This payment history is going to be reported to both TransUnion and Equifax, your credit score will start to improve, but you need to sign up for these secured credit cards today.

Budgeting for the new car payments

The bankruptcy would have wiped out your existing debts, so you should have a tremendous amount of room in your budget for new debt.

What you should do is create a budget, so you know how much cash you have left over every month after paying your rent/mortgage and other basic expenses.

As part of your bankruptcy, you would be required to take two (2) financial literacy classes; these would cover topics like budgeting.

By creating a budget, it will clearly show how much cash is available that can go towards your new car purchase.

Having the right expectation

Something that you will need to do is establish the right expectation when trying to get a car loan after bankruptcy.

If you are applying without a co-signer with strong credit, you will qualify for a high-interest car loan; this is due to bankruptcy.

With car prices on the rise, you will probably not be able to get approved for a brand new car loan and will need to opt for a used car loan.

You should think of this experience as a stepping stone in your financial education; if you keep your payments current, then in a few months, you can refinance the car loan to something more competitive.

If you want to get approved for a car loan after going through bankruptcy, then you need to reach out to your local car dealership.

The local dealership has credit experts on staff that will identify which lenders will give you the most competitive deals out there; you just need to pick up the phone and contact them now.

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!

Let’s get in touch! 

Dixie Auto Loans