Settling your debts is the first major step toward rebuilding your credit, and a consumer proposal does precisely that.

But can you get a car loan during a consumer proposal?

The good news is a consumer proposal allows you to clear your debts and begin rebuilding your credit at a faster rate than you were able to before.

And yes, it’s possible to be approved for a car loan during or after a consumer proposal.

Follow this guide to learn how.

How to get a car loan during a consumer proposal

A car loan is a great way to build credit. Many car dealerships in Canada offer financing options tailored for people looking to rebuild their credit after a consumer proposal.

Let’s look at some tips for getting a car loan with a consumer proposal or after you’ve completed it.

1. Understand what lenders will look for

Firstly, it is imperative to show lenders that you are responsible enough to access better credit products.

When applying for a car loan, lenders will look at the following to determine whether or not you will be approved:

  • Credit history.
  • Employment.
  • Income and affordability.
  • Savings and any assets.
  • Secured debts, such as a mortgage.
  • Your consumer proposal agreement.

If you want to get a car loan while in a consumer proposal, a steady job and stable income are essential because your credit score will be lower, and your proposal will appear on your credit report.

Be certain that you can afford a car loan. Review your budget to determine how much income you have and how much you spend every month.

2. Improve your credit

Improving your credit is one sure way to increase the likelihood of being accepted for a car loan.

Check your credit report regularly to monitor what’s being recorded while also learning how to improve your credit score.

Obtain affordable new lines of credit to improve your credit score (a secured credit card is a quick win). Then make payments on time to boost your score further.

Stay on top of your finances by tracking what’s going in and out of your bank account. Save money where possible and live within your means.

Lastly, consider waiting until your consumer proposal disappears from your credit report. This happens three years after completing your proposal or six years from the date you filed, whichever is sooner.

See also: Rebuilding your credit during and after a consumer proposal

3. Reduce your credit utilization ratio

Your credit utilization ratio is the total credit available to you on all of your financial products. This is the second most influential factor in your credit score calculation.

For example, if you have a credit card with a $1,000 limit and have used $600, your credit utilization is 60%.

To ensure that your credit utilization ratio isn’t too high, keep your borrowing ratio to less than 30% of your available credit.

You can do this by making more than the minimum payment towards your credit accounts. Increasing or adding more credit can also improve your credit utilization ratio.

Simply put, if you keep your balances low, your credit score will rise.

4. Supply your paperwork

Lenders want to know that you can comfortably afford a car loan and want assurances that you are repaying your debts through your consumer proposal.

So, to streamline this process, ensure you have all the paperwork related to your proposal.

If you have completed your consumer proposal, make sure you have a copy of your Certificate of Full Performance to provide this to the lender.

By sending your certificate to both Equifax and TransUnion, you can ensure that you are discharged from your debts. You might even see a slight improvement in your credit score.

5. Find the best lender for your circumstances

A consumer proposal affects your credit, so it’s not as easy to be approved for a car loan, and some lenders will look to apply stricter terms or higher interest rates because of this.

When you apply, pay particular attention to the interest rate. Research lenders thoroughly and look for low rates.

Don’t be pressured into a high-interest loan that could cause you further financial hardship or leave you unable to make your consumer proposal payments.

Talk to your financial institution about tailored car loans for people in a consumer proposal looking to rebuild their credit.

You’ll also find that offering a down payment can improve the chances of your application being accepted.

Often, prime lenders such as banks are wary of offering loans to people with poor credit (under 650), so you may be limited to private or subprime lenders. Subprime credit describes financial products above the prime rate due to poor credit, low income or high credit utilization.

Auto brokers work with car dealerships and private lenders and specialize in finding loans for people rebuilding their credit. Reach out to see if they can help you find a tailored car loan for your circumstances.

Lastly, ensure the lender is legitimate: always read reviews to ensure the company is reputable.

Here’s a tip: consider the type of car you need and set realistic expectations.

Get a car loan after consumer proposal discharge

It’s easier to get a car loan when you’ve successfully fulfilled the terms of the consumer proposal. When this happens, it will be easier to access various credit products, including car loans.

Your Certificate of Full Performance is proof that you completed your consumer proposal, so make sure you supply a copy to the lender.

See also: Your credit score in a consumer proposal


You can get a car loan while in a consumer proposal under certain conditions, but patience is required.

Eliminate your debts through your consumer proposal and re-establish your credit to give yourself the best possible chance of being approved for a car loan.

If you have questions about a consumer proposal, let us connect you to a Licensed Insolvency Trustee in your area today.

It’s free, confidential, and there is no obligation.

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