Buying a car while in a consumer proposal

Buying a car while in a consumer proposal

Posted on June 28, 2022

Canadians are under a massive amount of financial strain; if you find yourself in a situation where you are not able to keep up with your debts and need help, a consumer proposal may be a more suitable option than bankruptcy.

While a consumer proposal can help you get back on a solid financial footing, there are some short and medium-term consequences that you need to bear in mind, as our Ancaster car loans team explains.

How consumer proposals impact your credit score

The consumer proposal essentially asks creditors to forgive a portion of your debt and to give you more time than originally agreed to repay that debt.

This puts the creditors at a tremendous disadvantage, and they will report that to both TransUnion and Equifax.

This negative item will stay on your credit report for up to seven years and can make securing new credit in the future more expensive.

Putting yourself in a position of confidence when buying a new car

While you could get approved for a new car loan if you did nothing to improve your credit score, you should begin taking some proactive steps to improve your credit score.

A higher credit score will help you save money on financing because you never know when you will need financing.

You will need to sign up for Credit Karma to find out what your current credit score is and also give you a starting point to track your progress.

After you have access to your credit report, you can start signing up for credit rebuilding services and programs like Koho Credit Builder. This facility only costs $7 per month for the next 6 months, and it will report an active tradeline to TransUnion and Equifax.

These new tradelines will help improve your credit score, especially after coming out of a consumer proposal.

While waiting for your credit score to start to improve, this would be a great time to review your budget to see how much cash you have available for your new car purchase.

Budgeting during times of high inflation

With inflation at a generational high here in Ancaster, you will need to dig deep and look for ways to reduce the total amount of money you are spending on a monthly basis.

One of the upsides of going through the consumer proposal is the total amount of debt you are carrying should be greatly reduced; this means you have more cash that can go towards servicing your new car purchase.

Where to get a car loan approved after a consumer proposal

If you need a new car right away and don’t have the luxury of time to wait for your credit score to improve, you can visit a local car dealership that has a reputation of helping credit-challenged borrowers like you get the car they need.

These dealerships will have an extensive database of lenders they work with, so you should have no issues getting approved.

The dealership can also show you how to improve your credit score based on your unique circumstances; this is a service you cannot find anywhere else.

With car prices on the rise, you should contact your local dealership today and find out the maximum amount you can borrow for a new car; there is no risk to you, so contact the dealership today.

Contact Unique Chrysler for help, advice and competitive Ancaster car finance and leasing.

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