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How to get approved for a car loan when you are in a consumer proposal

Posted by on Aug 25, 2022 - Archived under Bad Credit Car Loan Tips

A consumer proposal is a financial tool Canadians can use in lieu of bankruptcy when trying to get their debts under control.

While a consumer proposal can help you regain your financial footing, once you have completed the consumer proposal, being able to secure credit can be a challenge.

How a consumer proposal impacts your credit score

While a bankruptcy devastates your credit score, a consumer proposal is not far behind. It is less severe than bankruptcy, but the impact on your credit score could be essentially the same.

Since you don’t have a credit score, it makes securing a car loan practically impossible without the right professional help.

We will show you the steps you need to take in order to secure a car loan after a consumer proposal but let’s spend a few moments reviewing what you need to rebuild your credit score so you never have to deal with these credit-related challenges again.

Documenting why you had to go into a consumer proposal

Prospective lenders will want to know why you ended up in a consumer proposal. Did you suffer a relationship breakdown, or did you lose your job due to the pandemic?

There are many different reasons why an individual can end up in financial strife; having an explanation can demonstrate that you have taken responsibility for the situation, which doesn’t guarantee approval but shows you are serious about your finances.

How to rebuild your credit from scratch

After you have documented why you ended up in a consumer proposal, you need to start working on rebuilding your credit.

There are financial tools like the Koho credit rebuilding tool, where you pay $7 per month for six months; these payments are reported to Equifax, which helps you start building a credit score.

You can also sign up for a Capital One Secured Mastercard; these secured credit products are guaranteed, so you don’t have to worry about being rejected.

It can take up to six months before your credit score really climbs, but it will be worth the effort.

Where to get approved for a car loan today

If you need a new vehicle today and cannot wait for your credit score to rebound, the only option you have aside from winning the 6/49 is to work with a dealership in your area, a local dealership that specializes in helping borrowers with credit challenges.

The dealership is going to take its time to better understand you and your situation. They will need the backstory of why you ended up in a consumer proposal.

Once the dealership has the full picture, they are going to go through their network of lenders and pick the lender that will give you a second chance.

The interest rate you pay on the car loan will be high, but you will be able to drive home in a new car today.

We’ve covered what steps you need to take when trying to get approved for a new car loan after going through a consumer proposal, so why not contact the dealership 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