Announcing The Winner of Our Financial Literacy Scholarship (Spring 2022)
We are awarding $750 to a student every semester. All you have to do is show us how financial literacy has made a difference in your life.
If you’re currently working through a consumer proposal but find yourself needing some extra help a loan might be the only solution to the financial crisis you’re going through. So, can you get approved for a loan while you’re in a consumer proposal?
Looking for another type of debt management product? Read this.
A consumer proposal is a legally binding document that’s drawn up between you and your lenders with the help of a licensed insolvency trustee, a certified agent of the court trained to deal with consumer proposals, bankruptcies, and other legal affairs. These proposals are reserved for borrowers who have too much debt to handle on their own and therefore need a way to reduce their debt level, while at the same time satisfying their lenders demand for payment.
Want to know if you can pay off your consumer proposal early? Find out here.
While a consumer proposal can be beneficial, like any debt product they do come with some drawbacks that you should consider before you decide to file for one. After all, consumer proposals are not right for everyone. They’re meant to be used by borrowers in very unhealthy debt situations as a last resort before declaring bankruptcy.
Consider these facts before you file for a consumer proposal:
Click here to learn when your consumer proposal will be accepted or rejected.
It’s also best to realize the potential consequences that one of these proposals can have on your credit health. While it is true that a consumer proposal can eliminate the majority of your debt problems, it can have a cumbersome, lasting effect on your credit.
Here’s how:
Looking for even more information about credit scores? Click here.
Now it’s time to move on to the question at hand. If the vast majority of your income is going toward your consumer proposal payments, you might end up with no money left over for your other expenses, or to deal with any unexpected costs that come your way.
Here’s what could happen if when you can’t afford your consumer proposal.
While a consumer proposal can be pretty damaging to your credit and finances and many lenders will deny your applications because of that fact, it’s still possible to get approved for a loan under the right circumstances. Even though you would have an easier time getting approval if you wait until your proposal is finished, it can be acquired during your payment schedule. However, that approval will be much more difficult to earn than it would be if you didn’t have that consumer proposal hanging over you.
Here’s what to expect when you apply for a loan during your consumer proposal:
So, we’ve determined that while it’s difficult to obtain, loan approval is possible if you can prove that your consumer proposal has made you a more responsible borrower. Now it’s time to discuss how you should go about getting your loan. Below, we’ve provided a basic step-by-step process that you can follow to avoid further debt problems or having your application denied altogether.
One of the main problems with getting a loan while you’re in a consumer proposal is finding a lender that will not only approve you but is a legitimate lender. Unfortunately, most prime lenders, like banks and credit unions, have strict regulations for their borrowers, so you may find it very difficult to gain approval with them. In that case, you may have to apply with an alternative, private, or bad credit lending source.
Applying with a bad credit lender? Here’s what they look for in an application process.
What to Watch Out For With Alternative, Private, and Bad Credit Lenders
Be cautious when trying to find a lender who’ll approve you during your consumer proposal. While approval can be easy enough to get with one of these lenders because they often cater to clients with similar debt-related issues, there are some things that you definitely need to watch out for, including but not limited to:
To avoid these situations, do a lot of research prior to applying. Compare lenders in Canada. Look up customer reviews and check to see that the lender’s company name shows up in the Better Business Bureau database. Remember, if the deal sounds too good to be true, it probably is!
You can also learn how to identify a loan scam using this short video.
Let’s say you’ve found a legitimate lender who’s willing to grant you a loan. Like with any credit product, you’ll have to go through your lender’s particular approval process.
Looking to create a plan of action to tackle your debt load? Check out this infographic.
Factors Your Lender Might Look at During the Application Process
While the application and approval processes vary from lender to lender, yours might be particularly strict simply because of your consumer proposal. However, the main elements of a typical application process will still be present, including but not limited to an inspection of:
Read this to learn what happens to your debt when you file for a consumer proposal.
Again, as it should be with any credit product, it’s important to prepare yourself properly before you apply. You should even double your efforts, considering how unworthy of credit your consumer proposal will make you appear to be.
Essential Steps to Take When Applying For a Loan:
Another important note: While offering assets or a cosigner’s permission can increase your approval chances and earn you a lower interest rate, severe consequences might arise if you default. If you stop making loan payments, your asset might be repossessed (car) or foreclosed (home) and sold at auction so the lender can recuperate part of their investment. In the case of a cosigner, the responsibility of your payments will fall to them if you default, potentially causing them hefty debt and credit damage if they also can’t keep up with the payments.
If you’re in the middle of a consumer proposal and need a loan, or you’d just like some more information about the consumer proposal process, Loans Canada can help you. Contact us today!
Rating of 4/5 based on 5 votes.
Save time and money with Loans Canada. Research and compare lenders before you apply. Share your experiences with Canada's top lenders.
Whether you have good credit or poor credit, building financial awareness is the best way to save. Find tips, guides and tools to make better financial decisions.
We are awarding $750 to a student every semester. All you have to do is show us how financial literacy has made a difference in your life.
Almost $500 in commission-free trades. Code “50TRADESFREE”. Conditions apply.
Borrow $500-$50,000 from Fairstone by May 31 and don’t pay until July.
Build credit while spending money with the Refresh Financial VISA card.
With KOHO’s prepaid card you can build a better credit score for just $7/month.
Check out our interview with addy; a platform that allows Canadians to invest in different properties across Canada with as little as $1.
All consultations and conversations with Loans Canada and its partners are confidential and risk-free. Speak with a trusted specialist today and see how we can help you achieve your financial goals faster. Loans Canada and its partners will never ask you for an upfront fee, deposit or insurance payments on a loan. Loans Canada is not a mortgage broker and does not arrange mortgage loans or any other type of financial service.
When you apply for a Loans Canada service, our website simply refers your request to qualified third party providers who can assist you with your search. Loans Canada may receive compensation from the offers shown on its website.
Only provide your information to trusted sources and be aware of online phishing scams and the risks associated with them, including identity theft and financial loss. Nothing on this website constitutes professional and/or financial advice.