Can I Buy a Car With a Consumer Proposal?

Can I Buy a Car With a Consumer Proposal?

Securing an Auto Loan Post Consumer Proposal

Dealing with a mounting debt burden can be a daunting task. If you’ve exhausted all possible solutions to manage your debt, you may be left with no other option but to file for a consumer proposal. While this is not an ideal scenario for your credit health, it can be a lifesaver in managing your financial situation. However, it can also affect your ability to secure loans, such as a car loan. This article investigates the question – “Can you get a car loan after a consumer proposal?”

Comprehending a Consumer Proposal

A consumer proposal is a legal agreement between you and your creditors, mediated by a Licensed Insolvency Trustee (LIT), to repay a fraction of the debt you owe or extend the repayment timeline or both. This legal pact is overseen by the Office of the Superintendent of Bankruptcy Canada.

A consumer proposal can be a viable alternative to bankruptcy, providing a win-win situation for both the debtor and the creditors. However, it’s worth noting that a consumer proposal can negatively impact your credit score and stay on your credit report for three years after the final payment.

Impact of Consumer Proposal on Credit Score and Car Loan

A consumer proposal, much like bankruptcy, can significantly impact your credit score. This impact can make it challenging to qualify for loans, including auto loans. Even after you’ve completed your consumer proposal, the “R7” rating on your credit report (indicating a settled debt) can affect your ability to get a car loan.

However, it’s not impossible. Many private and alternative lenders may offer car loans to those who have completed a consumer proposal. The criteria and interest rates might be stricter and higher, but getting approved for a car loan post a consumer proposal is definitely possible.

Securing a Car Loan During a Consumer Proposal

While it’s one thing to secure a car loan after completing a consumer proposal, it’s a different ball game to secure one during the proposal. The good news is that it’s possible to get auto financing during a consumer proposal. However, it can be challenging. Applying for new credit during a consumer proposal could reflect negatively on your credit report and add to your debt pile.

Alternative lenders might be more inclined to approve your loan application during a consumer proposal, compared to traditional lenders like banks and credit unions. However, you might have better chances of securing a car loan if you wait until your consumer proposal is completed.

Steps to Secure a Car Loan After a Consumer Proposal

If you’ve successfully completed a consumer proposal and wish to secure a car loan, you can follow these steps to maximize your chances of approval:

1. Compare Lenders

Before settling on a lender, it’s wise to shop around and compare offers. Since you’re just out of a consumer proposal, you might have better luck with private and alternative lenders who work with bad credit borrowers and those who’ve recently completed a debt relief program.

2. Get Pre-Approved for a Car Loan

Getting pre-approved for a car loan can speed up the final loan approval process. It can also help you compare offers and secure the lowest available interest rate. However, remember that the pre-approval is conditional until the lender verifies the information you’ve provided.

3. Gather Your Documents

Before starting any application, gather all the necessary documents. This may include bank statements, an employment letter, and proof that you’ve successfully completed your consumer proposal.

4. Ensure Your Finances are in Order

Before applying for a car loan, ensure your finances are in order. The lender would want to verify that you have enough finances to cover your loan payments comfortably. If your debt load is already high, you might not have much cash left over for new car loan payments.

Rebuilding Your Credit After a Consumer Proposal

After a consumer proposal, your credit score may take a hit. To rebuild your credit, consider applying for a secured credit card and make timely payments on it. This can help improve your credit score over time. However, remember that rebuilding credit takes time and patience, so be ready for the long haul.


In conclusion, while a consumer proposal can impact your ability to secure a car loan, it’s not impossible. The chances of getting an auto loan post a consumer proposal are higher with private and alternative lenders. However, it’s essential to be diligent and patient in rebuilding your credit and ensuring your finances are in order before applying for a car loan.

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