First off, consumer proposal (also known as personal proposal) is defined as a financial agreement between a debtor and lender which is mediated by a consumer proposal administrator or a licensed trustee. Moreover, in a consumer proposal, you come to an agreement with your lender that you will only pay a portion of the total debt and the remaining balance will not be counted anymore by your lender. Filling for a consumer proposal is an alternative to bankruptcy and needless to say, bankruptcy is much worse than having a consumer proposal on your credit history.
You might be wondering why would a lender agree to leave out a portion of your debt. To put it simply, lenders would prefer receiving a fraction of the original amount than not getting any amount at all. In contrast, if you go bankrupt, they would receive a lesser amount when compared to a consumer proposal.
Even with a consumer proposal on your credit history, you can still get an auto loan at a fair price. This article will give you excellent tips on how to get a consumer proposal auto loan and the benefits of getting one. New Car Canada specializes in helping individuals recover from serious credit issues (such as consumer proposal) by giving them an instant auto loan approval with very reasonable interest rates. You don’t need to settle for expensive rates, apply now and learn more about our amazing offers.
Opting for a Consumer Proposal is Better than Bankruptcy
There are several reasons why consumer proposal is more convenient than bankruptcy. First off, the overall process of consumer proposal is much easier than bankruptcy and more importantly, all your assets are intact. Once you enter a consumer proposal, debt collectors can no longer annoy you for payment and the interest stops piling up the day you file for a consumer proposal. Second, you will only pay a fraction of what you original owe in a maximum period of 5 years depending on the situation. Unlike in bankruptcy, your assets (i.e. house, car, etc.) are at risk of getting repossessed by the creditor.
Not as Severe as Bankruptcy
Although consumer proposal is still considered as a serious credit issue, compared to bankruptcy, it is not that bad at all. In a consumer proposal, your credit rating will be reduced to an R7 rating while in a bankruptcy, your credit will be rated as an R9 (which is the lowest credit score that a person could get). That is why you shouldn’t be so rash as to filing for bankruptcy right away. Talk to a financial expert and let them assess your situation.
Save up for a Down Payment
It is still very much possible for you to acquire a car loan while still settling a consumer proposal loan. While there are a lot of traditional lenders in Canada that offer consumer proposal car loans, it is most likely that their offer will come with very high interest due to your credit situation. However, by saving up for a down payment, you can minimize the total amount that you want to be financed therefore saving you money on interest payments. Moreover, there is also a chance that your lender will decrease the interest percentage because putting a down shows that you are fully committed to this car loan and thereby showing your lender that you are a less risk.
Looking for a Good Cosigner
Another alternative is by looking for someone with exceptional credit to co-finance the auto loan with you. A good cosigner will compensate for your bad credit thus reducing the risk overall. Even with an ongoing consumer proposal payment, having a cosigner will increase your chances of securing not just a car loan but an auto loan with a fair interest rate. Anyone can be your cosigner, just make sure that he or she is well aware of the responsibilities a cosigner bears until the duration of the car loan.
Choose an Affordable Vehicle
Remember that too much debt is the reason (most likely) why you got an R7 on your credit history, so don’t make the same mistake again. Acquiring a car loan is the best way to overcome a serious credit issue. By successfully paying off an auto loan, it will significantly improve your credit. In addition, by being more prompt in your monthly payments (i.e. credit card bills), your credit score will surely improve in no time. That is why it is imperative that you should settle for a vehicle that is well within your financial cap space. Select a more practical ride that is good enough to satisfy your daily needs. Don’t worry, as soon as you’ve shown that you are a reliable payer, you can take on bigger financing at a low-interest rate.
Monitor Your Credit Report
At least once a year, you should monitor your credit score so you know where you stand. You can ask Experian, Equifax or TransUnion for a copy of your credit report. Even with the accuracy of technology, mistakes and erroneous data are still very much possible. Monitoring your credit will make you more aware of your situation. If you noticed an erroneous data, report it immediately so the credit agency can quickly address your concern. Click Here to learn how to fix your credit report.
Here at New Car Canada, we don’t give out interest based solely on your credit rating. If you have a stable job and income, we can offer you an auto loan option at a price you can surely afford regardless of a consumer proposal on your credit report. Fill out our 1-minute online application and learn more about our amazing car loan offers.
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