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Buying a car when you are on the brink of bankruptcy

Buying a car when you are on the brink of bankruptcy

At first glance, the title may seem odd; why would you buy a car when you are on the brink of bankruptcy?

There are a few compelling reasons and strategies you should consider if you find yourself in a similar situation, as our Puslinch car loans team explains.

Canadians need a car to lead a normal life

Unless you are living in an area where there is adequate public transit, which frankly speaking is only the GTA and Vancouver area of Canada, you need a car.

If you are on the verge of bankruptcy, you should consider getting a new car before filing.

A car is a secured asset, and in certain situations, the bankruptcy trustee will let you keep the vehicle provided it meets certain conditions.

If this is your first time filing for bankruptcy, provided your income does not exceed predetermined levels, you will be discharged in 9 months.

The rationale for this approach is once you file for bankruptcy, legally, no one can give you a car loan. And your cash flow is going to be severely restricted, and anything extra you bring in will go towards paying your creditors.

Where to find a car loan when you are on the verge of bankruptcy?

This is a delicate balancing act; you need to look at your credit score, and based on that, it will help you identify the best path to take.

If your credit score is under 600, you are in subprime territory and will only qualify for a used car loan.

If your credit score is over 680, you can access the most competitive rates, but lenders will pay attention to your debt-to-income ratios, which may be out of balance since you are on the brink of bankruptcy.

You should not apply online for a car loan, especially if you are facing insolvency.

These websites will conduct multiple credit report inquiries, which will negatively affect your credit score, making it even more difficult to secure a loan.

Where to get the right professional advice

You could benefit from a consumer proposal that will negatively impact your credit score but not as severely as filing for bankruptcy.

Consider speaking with an insolvency trustee or a local car dealership for input.

A local car dealership has credit experts on staff that can take a look at your situation and give you practical, real-world advice on what steps you should take.

The same dealership will also help you qualify for a car loan based on your current economic reality.

While all of this can seem overwhelming, there are options available to you, but you need to take the first step and reach out for help.

By restructuring your debt and talking to someone, you may realize that you don’t need to file for bankruptcy and can still get the car you want, but as mentioned earlier, you need to contact the dealership now.

We will use all our skill and experience to deliver the lowest possible Puslinch auto loan rates, guaranteed. Contact Car Nation Canada Direct to learn how we can help.

Categories: Auto Loan

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