Bankruptcy Car Loans for Canadians – Rebuild Credit with Auto Financing

Bankrupt? Go buy a car! Buying a vehicle after bankruptcy may seem stupid. However, it’s actually one of the best ways to repair a broken credit record. Read this article to understand how you can use your next auto loan to improve your credit score.

Bankruptcy in Canada

Bankruptcy is a legal status filed by a person who can no longer repay the debt he owed to creditors. Bankruptcy in Canada is more common than you might think. In fact, according to TransUnion, the average Canadian is more than $27,000 in debt. It also reported that the average person filing for bankruptcy owes more than $60,000, excluding mortgage. Statistics Canada reports that the average Canadian household has debt equal to 163.7% of their disposable income. It is estimated that one out of six Canadians will experience bankruptcy during their lifetime. Assuming bankruptcy and population rates would remain constant, another 4.5 million Canadians, a whopping 17% of the total population of the entire country, is expected to file a consumer proposal or declare bankruptcy over the next 30 years. 

Applying for a Bankruptcy Car Loan

Going through bankruptcy can leave you feeling vulnerable, nervous and even uncomfortable when you do finally apply for auto loans. To help you out, we listed the following reminders for you to keep when you start your car buying process.

Establish Your Priorities: Think through what your financial priorities are. When you’re looking to purchase a car buying a brand new car off the lot can seem tempting, but think through your goals. Your priorities must match your budgetand financial goals. A reliable pre-owned car can be an equally smart purchase, plus save you on depreciation. Think about the use that you will have for the car and finance a vehicle that is within the mileage and price-range that suits your needs.

Re-establish your credit: Apply for small lines of credit. Before you begin to look for a financing option on a car, it is important to have established a secure or unsecured credit card and some payment history. Many banks will offer unsecured cards to consumers, based on credit score. With a bankruptcy on your credit history, you may or may not have unsecured lines of credit made available to you. Secured credit cards are offered to consumers in exchange for a deposit. This card may come with an extremely high interest rate, but it is a way to rebuild credit. Use the card to make small purchases, and pay the amount off each month. Never miss a payment, or you risk setting yourself back further from your financial goals. Good payment history makes your credit score climb.

Pay On Time. Establish better credit for yourself by making timely, regular payments every month till your full loan amount is repaid. Focus on making regular payments and rebuilding your credit history for at least six months before you attempt to make a major financing purchase like an auto loan. Eventually, you will have built your credit enough to qualify for lower interest rate loans. If possible, pay off your loan as soon as you can as this greatly improves your credit.

Check your credit utilization. Credit utilization pertains to the ratio of the amount of credit in use in comparison to the your credit limit. For example, if you have a $2,000 limit on a credit card but have only charged $200, your utilization is 10%. Banks look at utilization to determine the likelihood that you are able to pay off your debts so make sure that you check this out as well.

Consider the interest rate you will pay. Following a bankruptcy, you can’t expect to qualify for 0% interest or special rate loans right away. You can, however, still qualify for loans to help you finance a safe, reliable mode of transportation. Interest payments add to the total cost you may expect to pay, so it is prudent to keep this in mind when pricing out vehicles. You may pay a higher interest rate, but there are ways to counterbalance a high interest rate and keep a low the total cost. Making regular payments will eventually enable you to refinance a vehicle after a few years.

Don’t get trapped in a long-term loan. Loans that are spread across a longer span of time may seem enticing to many buyers because the total amount owed on the car is divided across more months. This makes the monthly car payment appear to be lower. Although this may seem great upfront, you actually end up paying more over time especially when you factor in the interest that you pay on the loan. The longer you pay off a loan, the more interest you will pay. If you are paying a significantly high interest rate, you may be paying thousands of dollars more for your car. This financial bind can take years to pay off. 

Compare car loans and pick the best financing option for you. You are under no obligation to accept a loan simply because it is offered to you. Financing a car is a large chunk of debt to undertake. Don’t rush through the process. Do your research and take your time to review all loan options available before accepting an offer.

Use a post-bankruptcy car loan to reestablish your credit. Look for lenders and dealerships that offer post-bankruptcy car loans such as New Car Canada- an auto loan approval site that specializes in bad credit financing. They have various auto loan options designed to help bad credit individuals to get back on their feet. For instance, they have a Loan Reconsilidation Program that enables those with terrible credit to settle their credit card debts while paying off their auto loan. Click the Apply Now button to Apply for FREE. 

Bankruptcy isn’t a financial death sentence. Don’t let your credit history deter you from driving a safe, reliable car, truck or SUV that you need and want. With New Car Canada, you are guaranteed to get pre-approved for auto loans so you can get the car that you need and rebuild your credit in the process. Our application is 100% FREE OF CHARGE; you won’t be obliged to accept any offer you receive. It only takes 30 seconds to apply and less than 24 hours to get approved. Click the Apply Now button to get started today. 

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