Things to consider when buying a car after a consumer proposal

Things to consider when buying a car after a consumer proposal

Posted on September 14, 2022

Canadians around the country are experiencing extreme financial hardship. Consumer proposals might be an alternative to bankruptcy if you find yourself in financial trouble and unable to make your monthly payments.

Getting your finances back on track is possible with a consumer proposal, but you should be aware of the potential short and medium-term consequences.

The impact of customer proposals on your credit rating

Essentially, what the consumer proposal does is negotiate with your creditors for a reduction in the total amount owed and an extension of the repayment period.

Creditors will likely report this to both TransUnion and Equifax, making an already difficult situation even worse.

A negative credit entry can remain on a person's credit report for up to seven years, thereby increasing the cost of obtaining new credit in the future.

When you're in a solid financial position, you can buy a new car with total confidence.

You might be able to receive a new auto loan even if you don't do anything to raise your credit score.

However, action to boost your credit score is essential. One should always maintain a high credit score because one never knows when they will need to borrow money.

If you sign up for Credit Karma, you'll receive your credit score and have a place to monitor your improvement over time.

As soon as you obtain your credit report, you'll be able to enrol in Koho Credit Builder and other services designed to help you repair your credit.

For the next six months, this service will report an active tradeline to TransUnion and Equifax for $7 per month.

If you have recently emerged from consumer proposal, these new tradelines will help your credit score.

While you wait for your credit score to improve, you might check your finances to see if you have enough money to buy a car.

Why and how to budget when inflation is high

Inflation in Canada is at a level not seen in decades, so you'll need to get creative in finding ways to reduce your monthly outlays.

With the consumer proposal, you should have a lot less debt, which means you have more money to pay for your new car.

Where to go after a consumer proposal to get a car loan approved

If you need a new car right soon and can't wait for your credit score to improve, you can go to a local auto dealership known for assisting people with low credit like you get the car they need.

They will have a broad list of lenders they work with, so you shouldn't have any trouble getting authorized.

The car lot can also advise you on ways to raise your credit rating that are tailored to your own circumstances. There is no other place to get this done.

Automobile prices are going higher, therefore you should call your local dealership immediately to find out how much you can borrow for a new car.

You have nothing to lose by making that call to the car lot right now.

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

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