Yes! Yes, you can get a car loan during bankruptcy if you live in Canada and it's actually not as difficult as you might think. You might be thinking that creditors will run from your car loan application, but in fact, there are many lenders and creditors out there that want your business simply because your car loan would be a secured loan
A secured car loan is a safer loan type for lenders when working with people with not so great credit. Going through the bankruptcy process is hard enough as it is for obvious reasons, but please don't feel like this is the end of the world for yourself and for your credit. You can still rebuild your credit after a bankruptcy and one way to do so is with a line of secured credit.
How to Acquire Credit for a Car Loan During the Bankruptcy Process in Canada
One way to acquire credit during the bankruptcy process in Canada is with a secured loan, as stated above. So, what exactly is a secured loan? A secured loan is a loan type in which a borrower uses an asset as collateral in the event that they have to default on their loan.
Collateral can be anything of value, and if you default on your secured loan, the creditor can then take possession of the asset that you pledged to satisfy your loan agreement.
Other Ways to Get a Car Loan After Bankruptcy in Canada
Before attempting to apply for a car loan you'll want to follow these steps:
- Get a copy of your credit report, so that you can begin cleaning up your credit. See if there's anything on there that shouldn't be there and if there is, then dispute it. As for any other debt that could damage your credit, then begin cleaning it up by paying those things off little-by-little. Even if you’re past due debt is not completely paid off, if you at least show an attempt at repaying the debt, this will look better for yourself and will improve your credit rating later.
- Make sure to stay on top of your bills and pay your bills on time every month. Paying your bills on time will also look good for your credit.
- When you're ready to look into finding an auto dealership that deals with bad credit, you'll be happy to know that there are some dealerships that have actual departments within their dealerships set aside to specifically cater to people with less than perfect credit. You'll want to search for those dealerships before applying for any car loan, because this will make the process much smoother for both you and the dealer. You don't want to waste your time if it turns out they do not work with people with bad credit.
- Establish a good standing bank account and consider looking into a car loan within your own bank. You might be more likely to get a car loan that way, particularly if your paycheck is directly deposited into your bank account regularly. This shows the bank that the money is there to make timely payments.
- Look into programs that help people rebuild their credit and get started right away.
- Secured credit cards are another way to rebuild credit after a bankruptcy. With a secured credit card, your line of credit depends upon the amount of money that you put up front. If you put $300 on your card, then you have a $300 line of credit. You will then have to make payments every month on this card if and when you use your line of credit. You'll want to make timely payments or pay it off all at once to build your credit up faster.
So, as you can see, there are many ways to rebuild your credit after a bankruptcy to get that much needed car loan. Even if your credit has not been rebuilt yet, there are plenty of lenders out there that will be willing to work with you; you just have to find them.
This article was written by Cris Ravazzano.