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Car Loans After a Consumer Proposal Discharge in Canada

Posted by on Feb 07, 2024 - Archived under Bad Credit Car Loan Tips

If you’re looking for car loans after a consumer proposal in Canada, there are some important steps you should follow if you want to start leading a better quality of life.

 

The first thing we need to square away is you have completed the consumer proposal and have been discharged.

 

If you have not been released from the consumer proposal, then technically, you are not allowed to take on any new debts.

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Understanding Your Consumer Proposal

When you finance a car loan after a consumer proposal discharge in Canada, lenders will want to know more of the story. Maybe you’ve gone through a divorce, or maybe you’ve just recently lost your job and are struggling to make ends meet.

 

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 improving your financial position.

 

How a Consumer Proposal Impacts Your Credit Score

In essence, the consumer proposal asks your creditors to forgive a portion of your debt and extend the time you have been granted to repay the balance.

 

Naturally, this makes things very difficult for the creditors, who will inform Equifax and TransUnion about it.

 

Your credit report will reflect this adverse status for a maximum of seven years, which could increase the cost of future credit. This usually leads to having bad credit, making financing a vehicle more challenging.

 

Rebuilding Your Damaged Credit Score

Thankfully our credit score is constantly changing, so you can rebuild your score in short order, but you need to use the right approach.

 

The approach we are going to discuss does not utilize gimmicks or scams but industry best practices.

 

Kick things off by getting free access to your credit report; you can get access with both Equifax and TransUnion; it doesn’t cost you anything, so you have no excuse for not signing up.

 

Equifax Credit Report

 

Each of these credit reporting agencies has its own credit scoring model, so you need to stay on top of both of them.

 

Another superb way to improve your credit score consistently each month is by paying off a car loan. Your credit score loves to see you paying off debts each month with no issues.

 

Opening up New Credit Tradelines to Improve Your Credit Score

After you have signed up for free credit reports with TransUnion and Equifax, you need to open new credit tradelines to improve your credit score, preferably not with the companies that were part of your consumer proposal.

 

The majority of creditors out there will not approve you for car loans after a consumer proposal discharge. It’ll be challenging to get approved, but that’s where we come in. Over time, we’ve developed relationships with lenders and know which ones have the best chance of getting you approved.

 

What you need to do is open up a secured credit card account with Capital One and a credit-building loan from Koho.

 

Secured vs unsecured credit cards

 

These secured services will create positive, new tradelines on your credit report, which will start to build your credit score over time.

 

The most important thing you need to bear in mind is this is your chance to make a fresh financial start, so be sure to keep your payments current, or you could find yourself back to where you started with the consumer proposal.

 

Finding Room In Your Budget for the New Car

Something you will need to do is work out your budget to determine how much cash you have available and can put it towards the new car payment.

 

 

The average car payment in Canada is around $600 per month; this amount does not take into consideration insurance, fuel, and maintenance, so you should plan on spending around $1,000 a month to have a car in Canada.

 

Where to Find Car Loans After a Consumer Proposal

Now that you know how to get a car loan after a consumer proposal in Canada, contact your local dealership today and start exploring your options.

 

You will need to find a dealership in your area that works with buyers who have experienced credit challenges.

 

The dealership will know which lenders are willing to give you a second chance without charging usurious interest rates in the process.

 

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!

 

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