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Can I Get A Car Loan while in A Consumer Proposal?

Can I Get A Car Loan while in A Consumer Proposal?

Can I Get A Car Loan while in A Consumer Proposal? [2022]


With the tough times we have weathered over the past year or so, more Canadians than ever are finding it difficult to manage finance. The consumer proposal is a way for those in difficulty to enter a formal agreement to restructure debt and pay everyone off in a more affordable way. But can you buy a car during a consumer proposal? If you need a new car for work in Mississauga, can you use auto finance to buy it?


Yes you can.


It won’t be easy and you have some paperwork to deal with but it is entirely possible to get an auto loan while you have a consumer proposal.


What is a consumer proposal?


Source: cecraig.com


A consumer proposal is a formal agreement between you and a bankruptcy trustee to arrange payment of all your debt. It’s an alternative to bankruptcy and is useful if you have the means to pay your debt but need a little help or a little longer to do it.


It shouldn’t be your first option if you get into trouble but it is an option and it is certainly better than bankruptcy!


Consumer proposals and auto loans


A consumer proposal is noted on your credit report with an R7 designation. It signals to anyone who checks it that you have an agreement with previous lenders to service the debt as much as possible.


This will restrict the number of lenders willing to work with you and may require a bad credit car loan but you can still access finance should you need to.

You need to make sure you can prove affordability though. This can be a challenge unless you’re coming to the end of your proposal period.


You will also need to ensure your debt to income ratio is as low as possible. This will usually require you to be close to the end of the proposal period, having paid off most, or nearly all of your debt.


As you likely already know, anything above 30% debt utilization is regarded as high, so getting as close to that or even below it is optimal. If you can do that, you stand a much higher chance of being accepted for an auto loan.


Work with loan specialists


Getting a Car Loan after a Consumer Proposal in Niagara Falls


A mainstream lender is unlikely to deal with those with consumer proposals so you should stick with a specialist lender like Dixie Auto Loans. We specialize in car loans for people in all kinds of situations and have the expertise and pool of lenders willing to work with you.


We can help you prepare for the loan, help with the application and do whatever we can to help you qualify. As long as you can afford repayments, have low debt utilization and have paid off a significant portion of existing debt, you should be able to buy a car during a consumer proposal


We’d love to help you find the perfect car loan. Simply fill in the form below and we’ll get back to you ASAP! 


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