Finances

Loan while in a consumer proposal: is it possible?

Getting a loan while in a consumer proposal can be a little more complicated. In this article, we'll look over whether or not it is possible to get loan/debt consolidation help and the steps you need to take. Keep reading to see more!

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by Aline Barbosa

Published on 03/23/2022

Find out if you can get a loan approved even while in a consumer proposal

loan application form
Loan while in a consumer proposal: is it possible? Source: Adobe Stock.

A consumer proposal is a legal agreement between a debtor and their creditors to repay debts over a fixed period. One question that often arises for people in this situation is whether or not they can get a loan in a consumer proposal. The answer, unfortunately, is not always straightforward.

While not impossible, the process can be complex, and it is important to speak with an advisor to understand your options. Many lenders will work with consumers who are in a proposal, but each lender has different requirements, so it is essential to do your research.

There are also some things you should keep in mind if you decide to apply for a loan while in a proposal. For example, you may have to pay a higher interest rate or put down a larger down payment.

In this article, we’ll share everything you need to know about getting a loan while in a consumer proposal. So, keep reading to learn more about it!

Three types of fees: a guide for beginners

There are three types of fees you need to know before applying for a loan. See what they are here!

Getting a loan while in a consumer proposal: Infos and possibilities

loan application form
What are the loan options while in a consumer proposal? Source: Adobe Stock.

If you’re in a consumer proposal, you may be wondering if it’s still possible to get a loan. The good news is that there are still lenders who will work with you, but the process can be more complicated.

The main thing to consider is that the proposal will affect your credit score, making it challenging to find a suitable lender. However, you may be able to get a secured loan by using collateral such as your home or car.

Whatever option you choose, make sure you understand the terms and conditions before signing anything. Below, you’ll see two loan options available for people while still in the middle of a consumer proposal. 

Car financing 

Financing a car can be one of the most substantial resources in rebuilding your credit card. However, you must be aware of offers with high-interest fees. There are many appropriate options to buy a new or used card out there, even with bad credit ratings. 

You should note that the installments for a new car financing should not stretch your budget. Many auto lenders offer reasonable rates with great opportunities for building credit.

Some even provide loyalty programs for good payment records that will allow you to improve the vehicle once you re-establish your credit. To get a good deal, make sure you speak with auto finance brokers who have experience with car financing for clients in your situation. 

They will most likely know the best lenders to ensure you’ll get approval for a new car. The lender will assess your finances before providing you with a loan to ensure you’re keeping up with your regular payments.

But with the proper assistance from someone who cares about your credit rate as much as yourself, you should be able to get a new car even amidst a consumer proposal.

Applying for a mortgage

Applying for a mortgage while on a consumer proposal can be a little trickier. Most traditional lenders are more willing to work with you once your credit rating returns to a normal range. However, there are still options with the help of alternative lenders who might be willing to accept your proposition.

The lender will check your creditworthiness and most likely will also require documentation. The biggest issue with applying for a mortgage while still on a proposal is that the rate will be higher by default. That’s because they reflect the risks involved in financing a home for someone with bad credit.

The good news is that once your credit starts to improve, the rates will become a little more reasonable. However, it’s important to note that you might be asked to pay off your consumer proposal in full if the financing is approved. 

Bad credit after a consumer proposal: for how long does it last?

score meter
How long does a bad credit rate lasts after a consumer proposal? Source: Adobe Stock.

There are two major credit bureaus in Canada: TransUnion and Equifax. They each maintain credit reports about your personal credit behavior, like outstanding debt, credit applications, and whether or not you can keep up with your payments.

Once you file for a consumer proposal, the record will remain on your TransUnion report for up to six years from the day you filed for it. Or three years after you’ve finalized the proposal, whichever happens first. 

Equifax will keep your credit report on record for up to three years after your consumer proposal is finished. Even though that sounds like a lot of time, it might help you to rebuild and establish your credit score.

Here are some tips to help you get back on a good credit report after a consumer proposal:

Work with a credit counselor

During your credit counseling, the professional responsible for your case can help you come up with a manageable budget for all your monthly expenses, obligations, and monetary goals. Together, you can explore different resources and tools to help you maintain a healthy spending habit. 

Apply for new credit

Once your proposal is complete, take the first step toward healing your credit report. You can apply to two different small credit sources. For instance, you can get a car loan and a secured credit card with a small credit limit. It’s important that the company you get the credit from reports all your payments to Equifax and TransUnion.

If you manage to meet your payment obligations on time, they will reflect on your credit rating. Over time, you can rebuild a credit history by having healthy borrowing behavior. 

Always make all payments on time

One vital step to get your credit score back on track is to keep up with your payment obligations. If you end up forgetting a due date and miss one of those payments, call your service provider or creditor and ask if they will report the missed payments to any of the bureaus. 

Most companies don’t report late payments as they happen, but there are some that do. Be sure to pay close attention, so you don’t miss out on anything. 

Are you already done with your consumer proposal and is on the lookout for a secured credit card? Then meet the OpenSky Visa. This card reports all payments to major credit bureaus and is a sure-fire way to help you get back on your feet! Follow the link for the application process.

Cartão de crédito Opensky Secure Credit Card

Applying for the OpenSky Secured Visa Credit Card

Learn the application process for your OpenSky Secured Visa Credit Card and begin rebuilding your credit today!

About the author

Aline Barbosa

Aline Barbosa is an editor, writer and learning-enthusiast. Passionate about music, books and human behavior. Curious about the unknown. Believer that learning is a life-long process.

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