Can I Get A Loan While in a Consumer Proposal?
Getting Credit While in a Consumer Proposal
Filing a consumer proposal is one of the most reliable ways to get out of debt.
Depending on your circumstances, you could potentially reduce your debt by up to 80%.
However, it’s a good idea to remember that applying for a consumer proposal does leave a note on your credit report stating that you have filed a proposal.
This doesn’t make it impossible to get a loan, but it can make it more difficult to borrow new funds.
However, you might be able to renew existing secured loans such as your mortgage or car financing.
Renewing a mortgage, lease or car loan
Filing a consumer proposal doesn’t mean that you’re unable to continue making loan payments.
In fact, if you’re up to date with your current existing mortgage, lease or car loan, then your lender will be able to renew your loan when the term comes due.
You likely won’t be able to negotiate a reduced interest rate or changes in yoru loan terms, but most individuals that are still up to date with payments will be able to renew their existing secured loan without much issue.
Getting a new loan or refinancing
Applying for new credit or changing lenders will be difficult while you’re in a consumer proposal.
If you’re borrowing to pay for a car and have a large enough down payment and good income, you may be able to get a new loan.
However, you may be charged a slightly higher interest rate than usual depending on your circumstances and the lender you’ve chosen.
You’ll also be able to qualify for a secured credit card as a way to rebuild your credit score.
This will make it easier for you to get a loan in the future once you’ve gradually repaired your credit ratings.
Things to consider before getting a new loan
When applying for a loan, there are a couple of things that you should consider.
- Understand why you’re applying for new credit. Is it because you’re having a financial emergency? Is it because you’ve got emergency expenses? The goal of a consumer proposal is to have a fresh start and avoid new debts in the future, so be more mindful of borrowing money from here on.
- Reflect on your credit counselling sessions. Part of the consumer proposal is a mandatory credit counselling session that teaches you how to manage your budget. Review your experiences here and look at any notes you’ve taken to help you decide if you really need to take out a loan.
- When you do qualify for a new loan, make sure you use it wisely and include it in your budget. Make sure you’re only borrowing what you can repay.
If you’d like to learn more about consumer proposals, don’t hesitate to get in touch with us today to ask us any questions that you might have.