Getting a car loan during or after a consumer proposal

During an active proposal

Some lenders approve buyers who are still making proposal payments. Two things make it possible: the trustee confirms in writing that the new car payment fits your budget, and your proposal payments have been on time. Rates are higher during this stage, and the vehicle budget is usually kept modest so the payment stays comfortable.

After the proposal is completed

Once you hold the certificate of full performance, the pool of lenders opens up and rates drop. A completed proposal stays on your credit report for three years after completion, but lenders that specialize in rebuilding credit expect to see it and weigh your income and payment history instead.

What the lender will ask for

Beyond the standard documents, bring the proposal paperwork itself.

• Your trustee's name and contact details, and the proposal number.
• A statement showing your proposal payments are current.
• The certificate of full performance, if the proposal is complete.
• Proof of income and address as for any car loan.

Differences between provinces

The proposal itself is federal, so the rules are the same. What changes is the purchase: an Ontario buyer registers at ServiceOntario and pays HST, a Quebec buyer registers with the SAAQ and pays GST plus QST, and buyers in Nova Scotia, New Brunswick, Prince Edward Island, and Newfoundland and Labrador pay HST at 14 or 15 percent and need a current provincial inspection on the vehicle. If you live in Gatineau and the right car is on the Ottawa side, the vehicle needs an SAAQ inspection before it can be registered in Quebec. We handle that step.

Rebuilding while you drive

A car loan reported on time every month is one of the fastest ways to rebuild after a proposal, because it is a new, current trade line that lenders read as evidence you are back on track. Many buyers refinance to a lower rate after twelve to eighteen months of clean payments.

What to say to your trustee

Ask one question: will you confirm in writing that a car payment of this amount fits my proposal budget. Trustees answer that routinely; it is part of the job. Bring the estimate from our calculator so the number is specific. A vague request gets a vague answer, and lenders will not act on a vague answer.

Trading a car you already have

If a vehicle loan was included in the proposal, the vehicle usually went back or was kept under a reaffirmed payment. Either way, tell us. A kept vehicle with a current payment can be traded, and its equity, if any, becomes your down payment. A returned vehicle leaves a deficiency that the proposal is settling, which lenders read as resolved.