Car Loans After consumer proposal in Canada - Auto Loan while in a consumer proposal

What is a Consumer Proposal?

A consumer proposal is a negotiated settlement between an individual and their creditors. It acts as an alternative to bankruptcy allowing the consumer to pay back a portion of their debt, while offering the creditors a chance to get back more money than a bankruptcy would allow. A consumer proposal is similar to debt consolidation, in that it can convert multiple loans into one monthly payment. It still however has many parallels with a bankruptcy.

Just like filing a bankruptcy in Ontario, a consumer proposal requires you to obtain the services of a licensed trustee to initiate and manage the proposal process. While it remains similar to both debt consolidation and a personal bankruptcy, the consumer proposal is still very different in both its procedure and its advantages.

Unlike a traditional personal bankruptcy, a consumer proposal lasts longer (in most cases 5 years). This allows you to resolve a portion of your debt over an extended time, while still letting creditors receive a bigger portion of the debt they are owed. Here are some specific advantages to a consumer proposal:

Advantages to a Consumer Proposal

•You can negotiate the pay back a portion of the debt you owe
•Collection activities stop (No more collection calls or wage garnishment)
•Your creditors take a smaller loss than they would if you filed a personal bankruptcy
•A proposal can be less damaging to your credit history than a personal bankruptcy
•You don’t have to lose your house
•You won’t lose your other assets
•You may still have the option of financing an auto loan (this applies to bankruptcy as well)
•It shows creditors that you are willing to work with them, showing character and commitment
Is a Consumer Proposal Right for You?

That is a very important question that doesn’t have a simple answer. If you are considering a consumer proposal, it is very important that you do your research. You need to research the trustee in bankruptcy you want to work with but more importantly you also need to think about your needs, your credit situation and your goals.

Most times it may be better to file a personal bankruptcy than it would be to file a consumer proposal. Half of all people who enter into a consumer proposal end up Going Bankrupt before the proposal is finished! It’s also important to remember that filing a bankruptcy or consumer proposal might not be the right move at all. Don’t let bad advice or being unprepared push you into a situation that may not be right for you. Here are some basic situations that might help you decide if a consumer proposal is right for you:

•Your debt is between $5,000 and $75,000 (do not include your mortgage in this amount)
•You make enough monthly income to support one large regular payment but not enough to catch up or pay off your other debts
•You don’t qualify for a regular debt consolidation loan from the bank
•You want to keep your assets and maybe get a new car loan (or used vehicle loan)
•You want to avoid bankruptcy because you make too much money (In a traditional bankruptcy they may seek surplus income charges)
•You want to avoid bankruptcy and be able to partially pay back your creditors
Consumer Proposal and Auto Loans in Ontario

If you’re discharged from a consumer proposal or even still in proposal, then you can get approved for an auto loan. While the major banks don't offer auto financing for people in a consumer proposal, there are many lending companies available to car dealers that offer special bankruptcy car loan and consumer proposal auto loan programs that allow individuals inside a consumer proposal or discharged from a proposal to finance a car loan. A consumer proposal auto loan is not limited to used vehicles or new cars. You can be qualified for any new or used car you choose.

When searching for an auto loan, the variables, like traditional auto financing are your affordability and your personal needs. If a car dealership or finance company tries to tell you that it’s impossible to be approved for an auto loan when in a consumer proposal or you are only approved for a smaller, older used car, then they don’t deserve your business.

Making regular monthly payments in your consumer proposal is how you settle the debt you owe your creditors and also how you re-establish bad credit. Since making regular monthly payments is so crucial to a consumer proposal, your ability to earn regular income and make those payments on time is most important. Recently many finance companies have started to take a positive approach to this catch 22 and have designed auto loan programs that allow consumers in proposal to finance a new car or used car while they settle their debt via bankruptcy or consumer proposal. After all, how can you afford to make your payments to the trustee if you can’t drive yourself to work!

Make the Right Decision for You

Please, if you’re debt or credit situation is leaving you struggling or thinking about filing for personal bankruptcy or consumer proposal take the time to consider your goals both short term and long term, do your research, find a qualified and licensed trustee that you’re comfortable with and make sure the decision you make, is right for you.

If you file for consumer proposal, show a positive proposal payment history for at least six months and have a qualifying job, then you may be approved for auto loan financing. Car Loans Canada works closely with credit unions, leasing companies, finance companies and banks that can approve your car loan, even if you’re in a consumer proposal.

Let us help you get approved, driving, and on the road to good credit.

Services available in: Ontario, Alberta, British Columbia, Manitoba, Saskatchewan, New Brunswick, Nunavut, Northwest Territories, Nova Scotia, Quebec & PEI. Applying is Free and you are under no obligations once approved!