I think that we can all agree that filing for bankruptcy is not great for your financial situation, especially the aftermath, but the question is: will you still be able to finance a car loan after bankruptcy in Ontario? We’ll explain.
What is Bankruptcy?
You’ve probably heard the term “Bankruptcy” before but it’s possible you don’t actually know what it means, let’s start by getting our definitions clear. Filing for Bankruptcy is basically saying to a debtor that you cannot repay the debt, the debtor still needs to be reimbursed however so you will have to pay with your assets instead.
This could be by liquifying some assets like second homes, or it could be by selling stocks and bonds. Or in extreme measures it could mean repossessing your belongings. Once it’s done however the debt is clear and you theoretically start on a clean slate, however it wouldn’t shock you to hear that most lenders aren’t overly inclined to a car loan after bankruptcy in Ontario.
Financing a Car Loan after Bankruptcy
Bankruptcy is more common than you might think, it’s estimated that roughly 1 in 6 Canadians will file for bankruptcy at least once in their life. That is a very high number of people, and so if lenders want to stay in business then they need to deal with people who have filed for Bankruptcy, though they certainly have no desire to make it easy.
If you are applying for a loan after bankruptcy here are a few things to be prepared for:
They will demand to know every single detail of your financial situation both before and after the incident and the exact situation which led to your filing for bankruptcy, if they don’t like your answers they may not grant the loan, and even if they do there will be a serious premium on it.
Bankruptcy and Low Credit score generally go hand in hand, so your only real option for loans will most likely be lenders who specialize in Poor Credit score loans. Like us! We don’t discriminate and would love to help you find your next car loan in Southern Ontario.
The total amount you can take out will be severely limited, you will be able to take out a loan for a car but you will not be able to qualify for anything especially fancy.
How Long Until you can get a Car Loan after Bankruptcy
Time is also an important thing to consider, for one if you’re trying to apply for a loan while the Bankruptcy filing is still underway that isn’t going to work out well for you. You want to put some serious distance between your bankruptcy filing and applying for a loan. 9 months to a year minimum.
Progress will be painfully slow but you can use this time to try and rebuild your credit. Making credit card purchases regularly and paying them off on time will slowly but surely start to rebuild your credit score. Bankruptcy will still look bad, but at least a rebuilt credit score shows you can still be reliable.
We’d love to help you find a fair-priced car loan after bankruptcy and love to work with people at all credit levels. Click here to get pre-approved online with us at Click to Drive in Brantford, or click here if you have any questions or inquiries about financing a car loan after declaring bankruptcy.