So you’ve declared bankruptcy, but are in desperate need of a vehicle. There’s no hope in the world to finance a vehicle right? Not necessarily. It definitely makes the situation a bit more challenging, but not impossible.
Thankfully there are lenders like Go Auto Finance who exist to help with lower end credit and bankruptcy situations. Bankruptcy is not meant to be such a bad thing. It’s an opportunity to break away from financial hardship and overcome your debts. People declare bankruptcy for all sorts of reasons, not just poor spending habits.
Your specific situation will greatly impact how a lender views you, and your ability to repay an automotive loan. In a lenders eyes, you present a risk. That due to your previous borrowing habits, you may not be the best candidate to be lent money. But don’t worry, proving that you ARE a good candidate is not out of reach. Firstly, let’s address a few questions.
Consumer Proposal vs Bankruptcy?
A consumer proposal is a legal agreement between a Licensed Insolvency Trustee and your creditors, which acts to resolve the debts that are owed. This provides you protection from the debt collectors, and allows you and your trustee time to work towards an offer of repayment or partial re-payment of the before mentioned debt.
A personal bankruptcy is a legal arrangement that provides financial relief over unmanageable amounts of debt. Your assets are transferred over to a trustee, who is appointed to overlook the bankruptcy on your behalf. Once discharged, debts will be taken care of.
Although similar, a consumer proposal and bankruptcy are two completely different scenarios. Bankruptcy payments can vary based on your income whereas consumer proposal payments are based on the agreement between the trustee and your creditors (fixed amount throughout the length of the proposal). A consumer proposal is generally longer and the payments can be spread out over time. A bankruptcy can be discharged as quickly as 9 months depending on the situation.
Both options provide different outcomes when it comes to vehicle financing. Your bankruptcy/consumer proposal payments (and term) will affect IF you can finance a vehicle, and what kind of vehicle that may be.
The actual time that you have been in bankruptcy plays a significant role in getting approved for a vehicle loan. If you just declared bankruptcy last week, chances are you are not going to get approved. It’s recommended you wait at least 6 months after declaring bankruptcy before applying for an auto loan. There needs to be sufficient time to showcase to lenders that you can consistently pay off your bankruptcy payments on time before getting into another loan.
The main document needed to finance while in bankruptcy is a letter from your trustee. This is absolutely crucial, as it will be the decision of your trustee on if you can even finance a vehicle in the first place. This means you MUST be in good standing with your trustee – if you are behind on payments, it won’t help your cause.
If you’re thinking about getting into a brand new Jaguar F-PACE while in bankruptcy, you may need to think again. Be realistic with your choice of vehicle. There is only going to be a certain number of vehicles that fit your approval – units that align with your credit and budget constraints. Be ready to accept a higher interest rate in order to start re-building your credit – it may be unfortunate now, but will pay off in the long run. Also, be patient. It may take time to retrieve an approval as the dealership works with you, your trustee, and the lenders to make everything possible. Despite being bankrupt, the remainder of the financing process is generally no different than normal. You need to be employed, have a driver’s license, and provide pay stubs.
A car loan is one of the best ways to re-build credit. Go Auto has specific credit rebuilding programs in place to help deal with any current or past bankruptcies. Go Auto Finance can look past the banks, as they can lend you the money themselves! As I mentioned earlier, it can be tougher to get an approval but definitely not out of the question.
If you can provide the necessary documents, and are realistic with your vehicle options – getting into a vehicle while in bankruptcy can happen!
Have more questions about financing? Speak with one of our finance specialists to start rebuilding your credit today!