Car buying tips for Canadians that recently gone through a consumer proposal or bankruptcy

Car buying tips for Canadians that recently gone through a consumer proposal or bankruptcy

Posted on May 11, 2022

Suppose you were recently discharged from a bankruptcy or consumer proposal. In that case, it might seem impossible to get a car loan. In most instances, you will not be able to get approved for a car loan unless you follow the tips our Freelton car loans team has outlined below.

Coming to terms with your credit score

We need to work on rebuilding your credit score. A consumer proposal will stay on your credit report for up to three years after you made the last payment.

A bankruptcy will stay on your credit report for up to seven years, so you need to start building a positive track record as soon as possible.

The challenge is no lender is willing to give you a second chance even though the law says your debts are cleared.

The best way to start rebuilding your credit

Start by signing up for a secured credit card; you can get them from companies like Capital One. The secured credit card works just like a conventional credit card, but you need to deposit money which works as your credit limit.

You will receive an invoice every month which is reported to TransUnion and Equifax; by paying your bill every month, your credit score will start to improve.

Along with the secured credit card, you might consider signing up for a credit-building instalment loan like the one being offered by Koho.

The credit rebuilding loan works by you paying seven dollars every month for six months. These payments will also be reported to the credit reporting agencies, which will help your credit score rise even faster.

The importance of having a stable income

While you are working on rebuilding your credit, another important item that we need to discuss is your income; lenders want to be sure you will be able to repay the loan as promised.

Most lenders use the debt-to-income ratio method, where the most they will only approve a loan if your total debt in relation to income is less than forty percent, so if you were earning ten thousand dollars per month, the most you could qualify for would be four thousand dollars.

Lenders will need to see your salary slips and income tax assessments to verify you are actually making enough money.

Where to find car loans in Freelton

We touched on the fact that you would not be able to find a lender on your own; the only viable option is working with a local car dealership that has second chance financing.

These dealerships have credit experts who will spend some time reviewing the particulars of your situation and then negotiate a deal on your behalf.

The dealership will have access to all of the lenders in Canada, so they will know precisely who to contact.

When you go through the dealership, they will also be able to show you some steps on how to quickly raise your credit score; you just need to contact the dealership today and get things moving.

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