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Car buying tips for Canadians going through bankruptcy

Car buying tips for Canadians going through bankruptcy

Canadians that are going through bankruptcy and need a car should follow these tips. These tips have been tested in the real world and if you stick with our Halton car loans team to the end, you will be driving home in a newer vehicle.

What most people don’t know about bankruptcy in Canada

Most of us know about bankruptcy from playing Monopoly but don’t actually understand the legal implications in Canada.

When a person goes bankrupt, an insolvency trustee will submit official documentation to superintendent of bankruptcy; once the declaration of insolvency has been received, all efforts to collect on your debts are stopped.

During the bankruptcy, you cannot take on any new debts without written permission from your insolvency trustee; legally, you are not allowed to take any debts because you are no longer responsible for yourself.

After nine months up to 2 years, depending on how your bankruptcy is structured, you will receive an official discharge; only when you are discharged from the actual bankruptcy can you begin.

How bankruptcy impacts your credit for years to come

Even when you have completed the bankruptcy, it will stay on your credit report for the next seven years.

Your credit score is going to be very low, and most prospective lenders will decline your car loan application.

What you need to do is work on rebuilding your credit from the ground up.

  • Sign up for secured credit cards being offered by Capital One and Home Trust. These secured cards are guaranteed approval; you should use the cards but pay off the balance in full every month.
  • Sign up with a Koho credit builder loan; you pay $7 per month for the next six months. This installment tradeline will show up on your credit report and help kickstart your credit score recovery.

Calculating your new car buying budget

You will need to determine how much cash you can afford to put towards your new vehicle. While you may be tempted to max out your car-buying budget, the goal is to buy something that you can afford without getting yourself into too much debt.

The maximum loan lenders will approve is forty percent of your gross income, this factors in all of your current obligations plus the proposed car loan in Halton.

Since the bankruptcy cancelled all of your current debts, you should be able to afford a substantial car loan.

Securing the most competitive car loans after bankruptcy

To get the most competitive car loan after bankruptcy, you cannot find them on your own. The lenders that specialize in financing high-risk borrowers can only be accessed through your local car dealership.

You must look for dealerships that have been in business for a considerable number of years and specialize in offering second chance financing.

Once you have identified the dealerships in your community that provide this type of financing, contact them and begin reviewing your options.

By following these suggestions and buying a new car, you are beginning the next chapter in your life, which could be one of the best, but you will never know until you contact the dealership now.

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

Categories: Auto Loan

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