What is a Consumer Proposal?

A consumer proposal definition is a legally binding agreement, where the creditors agree to forgive the balance after you agree to pay a portion of what you owe.

Getting approved for a new loan while being in a consumer proposal is a difficult task, as appears on credit reports with an R7 status. Once a consumer proposal is wound up, this rating can stay on your report for up to three years. The idea of a consumer proposal is to help you get your finances back on track, so applying for new credit might reflect poorly on your credit report. The good news is that it’s not impossible to get approved for a car loan if you’re currently in or are soon done with a consumer proposal. Your life goes on the same way when you’re in a consumer proposal, you’re still paying your bills and making financial decisions. This being said, applying for a car loan while going through any kind of debt-relief isn’t uncommon. Here are three smart ways to getting a new car loan with an R7 on your file.

How Can I Get a Car Loan After a Consumer Proposal?

1. Go with a Private Lender

For several Canadians, having reliable transportation is important to being able to get to work and stay employed. Any consequences to your credit report by a consumer proposal might cause some worries, however by no means does it diminishes your chances of getting approved for vehicle financing in Canada. Getting approved for an auto loan while you’re currently in or coming out of a consumer proposal will depend on your personal ability to pay back the lenders. Unfortunately, banks don’t always factor in a good financial history when deciding the approval rate for a person with a consumer proposal on their credit report. Thankfully, many private lenders in Canada allow customers who have accepted all kinds of debt-relief obtain affordable auto financing. There will typically be stricter guidelines, however getting approved with a private lender is more likely than an established financial institution.

Canada Auto Experts can get you approved for an auto loan with great rates regardless of your credit score. Thanks to working with major car dealerships all across Canada, we’ve been able to partner with lenders who specialize in working with Canadians who have less than perfect credit.

2. Have your Proof of Proposal Payments Handy

Upon finishing a consumer proposal, a wise thing to do is prove to lenders that you’ve successfully completed the program and are financially stable to apply for a new car loan. Ensure that you show them all copies related to the consumer proposal – the certificate of completion and all other relevant documents. Although lenders will be able to see the R7 on your credit report, providing supporting documents will prove to them that you managed to adhere to previous lenders’ guidelines and can work to get your loans paid down in full each month. It’s also a great idea to send all consumer proposal documents to the two major credit bureaus in Canada – Transunion Canada and Equifax Canada, helping them update the same on your credit report.

3. Keep your Debt-to-Income is Low

While applying for a new loan while in a consumer proposal, or freshly out of one, it’s important that your debt-to-income is low. Otherwise, lenders will view you as a potential risk when you apply. A good option for those who are applying for a loan in a consumer proposal is to find a cosigner – this will minimize the risk to lenders and will also serve as a backup plan if you’re ever stuck in a scenario where you can’t repay your car loan.

Before making you way into a consumer proposal, it is crucial to determine that it is the right decision for you. In order to resolve your debt efficaciously, you must have a stable income to make monthly payments and pay the related fees. If you skip more than two of your consumer proposal payments in Canada, it may be necessary to file for bankruptcy. While a consumer proposal is great opportunity for many, it is not always right for everyone so make sure to do the proper research! If you need a vehicle and have no or low credit, visit Canada Auto Experts today to get yourself approved for affordable auto financing! Call 1-855-550-5565 to speak to loan specialist today.