People often worry that these sorts of events may stop them from being able to secure financing, like a car loan, in the future. While consumer proposals and bankruptcies can hurt your credit rating it doesn’t mean someone who has gone through one of these processes can’t get a car loan.
Let’s go over the difference between the two and how they will affect your ability to secure a car loan in the future.
What is a Consumer Proposal?
A consumer proposal is a way for people to settle their debts without going into bankruptcy.
With the help of a consumer proposal administrator you’ll negotiate with your creditors to repay a certain percentage of what you owe to them. All of your debts are then consolidated into one monthly payment that is significantly less than what you would have otherwise had to pay back.
The benefit of a consumer proposal is it can help you avoid having to file for bankruptcy, which can have a much more negative impact on your credit rating and put your assets at risk. It also greatly reduces your debt, making your monthly payments much more manageable.
The benefit to your creditors is that they at least get partially repaid and will receive much more than if you file for bankruptcy.
What is Bankruptcy?
Bankruptcy is the last resort for those who are in debt.
When you file for bankruptcy you surrender everything you own in exchange for being absolved of your debts. Your assets are then distributed amongst your creditors to help pay back what you owe them.
Although losing all your assets may seem harsh, the process immediately eliminates all of your debt. It’s often seen as a fresh start for those who are deep in debt and can’t get out.
For obvious reasons, filing for bankruptcy has a negative effect on your credit rating.
Getting a Car Loan after a Consumer Proposal or Bankruptcy
Getting a loan after going through a consumer proposal or bankruptcy will likely be a little more difficult, but it’s far from impossible.
The advantage of a car loan is that it’s a secured loan. The car acts as collateral, so if you are unable to pay back the loan your creditor can take possession of the car in order to get back what they’re owed. This means there is far less risk for the creditor and makes it easier for you to get approved.
At Auto Loan Services, our team specializes in securing loans for people with poor credit, or those who have gone through consumer proposals or bankruptcy. We have access to a number of different lenders and will work to get you the best rate possible.
We’re also able to match you with specialized lenders who deal with people with poor credit histories and have dedicated programs to assist you.
Are you curious what kind of car loan you’re eligible for? Contact us today and one of our team members will be happy to help you