Consumer Proposal Auto Loans in Canada
Auto Loans During or After a Consumer Proposal in Canada
A consumer proposal is not bankruptcy. It is a negotiated repayment plan with your creditors, administered by a Licensed Insolvency Trustee and governed by the Bankruptcy and Insolvency Act. You agree to repay a portion of what you owe over a period of up to five years, and creditors agree to accept that amount as full settlement.
Ready Auto works with borrowers in both active and completed consumer proposals. We have lenders in our network who specifically handle these situations in British Columbia and Alberta.
Why a consumer proposal is a stronger signal than bankruptcy
Many borrowers assume that a consumer proposal and a bankruptcy are treated the same by lenders. They are not. A consumer proposal demonstrates that you chose to repay your creditors rather than walk away. Specialist lenders interpret that as evidence of financial responsibility, not financial failure. Some lenders in Ready Auto's network will approve auto financing during an active consumer proposal, specifically because the borrower is demonstrating ongoing commitment to a repayment structure.
Financing during an active consumer proposal
When your proposal is still active, you are making monthly payments to your trustee who distributes them to creditors. Taking on new debt is not prohibited, but it does need to be manageable within your existing obligations. The vehicle you finance during an active proposal is new debt, separate from the proposal. In most cases, the vehicle cannot be claimed as an asset by your creditors since it is acquired after the proposal was filed.
After your proposal is completed
Once your proposal is complete, typically three to five years after filing, your credit rebuilding phase begins in earnest. The proposal remains on your credit report for three years after completion (or six years from filing, whichever comes first). At this stage, the full range of specialist lenders in our network becomes available, and rates improve considerably over what is offered during an active proposal.
Ready to find out what you qualify for?
Two-minute application. A finance manager calls you within twenty-four hours with an approval amount, a rate range, and a term. No obligation.