Have you recently completed a consumer proposal? Congratulations, by the way, dealing with debt and the effects it can have on your credit score is not easy!
Now you’re probably looking to take back control of your finances and may even be in the market for a new loan to make a purchase. Loans after a consumer proposal can be tricky, but not impossible. Keep reading for everything you need to know.
What Is A Consumer Proposal?
With a consumer proposal, a Licensed Insolvency Trustee sets up a legal agreement between you and your creditors. The goal is to repay part of or all of what you owe. They may also negotiate more time to pay it off. In some cases may also ask to lower or stop any interest accumulation of interest. Generally, a consumer proposal takes 3-5 years to complete and is a good way to pay off unsecured debts. Moreover, it protects you from collections agencies and creditors who may have been harassing you to pay back the debt.
Consumer proposals are not only a better option for consumers but also work in the creditor’s favour. More often than not, creditors get back more money than they would have if you filed for bankruptcy.
How Will A Consumer Proposal Impact Your Credit Report
Consumer proposals do have a negative impact on your credit report. However, if you are at a point where you need to take this option, chances are you already have a really bad credit score in the first place.
When you are completing a consumer proposal your credit report will reflect it with an R7 rating. After you have completed a consumer proposal, a note remains on your credit report for three years. This will significantly impact your ability to get a loan during that time period.
Can You Get A Loan After A Consumer Proposal?
Yes, you can get a loan after completing a consumer proposal, but your chances of qualifying for one will be low due to the impact it has on your credit. As a result, you’ll likely only be able to get a loan from subprime lenders who often charge high interest and fees.
Mortgages After A Consumer Proposal
Getting a loan from a private mortgage lender is possible, even if you previously filed for a consumer proposal. Many of these private mortgage lenders will take your credit with a grain of salt. Instead, they base their approval on your overall financial health. They will consider financial factors such as your income level, debt level, and employment stability. To help you find the best mortgage lender, it may be wise to use a mortgage broker to help you curate a list of potential lenders for you.
Car Loan After A Consumer Proposal
Auto loans may be one of the more accessible loans you can get after a consumer proposal due to the security it provides. Car loans are secured by the car you are buying, meaning, if you miss any payments, the lender can seize the car from you and resell it to recoup payment. Moreover, if you place a larger down payment, your lender will be more willing to provide you with the car loan, as there’s less risk of you owing more than what the car is worth.
Personal Loan After A Consumer Proposal
It is possible to get a personal loan after a consumer proposal, however, you can expect to be hit with high-interest rates, high fees and shorter terms. Moreover, your lender may require some form of security before extending the loan. This may include physical collateral like a house or car. You could also add security by getting a co-signer or a guarantor.
Credit Cards After A Consumer Proposal
While an unsecured credit card may be hard to qualify for after a consumer proposal, you could try applying for a secured credit card. Secured credit cards work just like regular credit cards except they require a security deposit which also acts as your credit limit. These credit cards usually have a lower interest rate and don’t offer points like regular credit cards. They are best for those looking to build credit as it reports payments to the credit bureaus and has very low qualifying requirements.
Spring Financial is an online consumer lending company that offers innovative financial and credit-building solutions designed to give Canadians the opportunity to build credit, save money and borrow responsibly.With many Canadians struggling with high-interest debt and limited financing options, Spring Financial strives to provide Canadians with affordable and accessible financial products that can help them achieve greater financial freedom. Among their growing suite of smart money solutions, Spring Financial offers $1,500 cash advances, personal loans up to $35,000, and a credit-building program that helps you build credit and save money.
The MogoMini line of credit offers Canadian consumers a great personal loan alternative. Borrowers can access up to $5,000, spend what they need when they need it, make the automatic minimum payments, and finally control their own principal payments. This Mogo product is flexible and users can test drive their line of credit for 100 days to see if it’s the right fit. Access their easy online application via your MogoMoney dashboard and get pre-approved in 3 minutes with no impact on your credit.
Cash Money has been helping Canadians access easy and quick loans for more than 30 years. They offer payday loans, personal loans, and line of credit loans from $1,500 to $10,000. User will enjoy their simple online application, personalized options, and same-day funding. Whether you need to cover an emergency expense or simply need to make it to your next payday, Cash Money can a variety of options to meet your needs.
Cashco Financial is a Canadian financial services company that offers short- and long-term loan options. Payday loans for up to $1,500 are available with no credit checks and instant approvals. Flex loans are available for up to $7,000 with loan terms of up to 60 months and flexible repayment options. Cashco is known for providing same-day funding, ensuring you have access to the money you need quickly.
Available in seven provinces, iCash is an online source of fast, small loans that can be used for any emergency. Approved applications are processed within the same day and no documentation is required before the transfer of your funds. You can borrow up to $1,500 with iCash. Every time you pay the loan back following the agreed-upon deadline, you become a more reputable borrower. The increased trust allows you to borrow more each time. iCash uses a Trust Rating System, an algorithmic function that determines your merit as a borrower.
Nyble helps users quickly access a line of credit of up to $250 without credit score requirements. This is a good option for anyone who wants to avoid overdrafts or needs a small amount of cash quickly. Approval is instant and funding takes up to 3 days. But if you upgrade to a paid membership for $11.99 a month, you can receive your money within 30 minutes. Nyble reports your payment history to the credit bureau monthly and approves you for large amounts as you build trust with the platform. You can also track your credit score, earn reward points for improving your score, and access other features such as credit monitoring and digital identity theft protection.
If you’re short on cash, Bree offers cash advances of up to $500 with zero interest. Bree is an online financial platform that provides interest-free cash advances to help consumers avoid overdrafts and NSF fees. Their mission is to be a dependable and accessible financial source that consumers can trust when they need financial support. Moreover, you can access the money you need with Bree without having to worry about credit checks, interest charges or late fees.
SkyCap Financial has been helping Canadian consumers take control of their financial futures since 2013. Their main goal is to provide alternative financing to all Canadians, regardless of their financial past or credit history. They provide fast and easy short-term loans ranging from $500 to $10,000 and approve applicants in as little as 24 hours. Consumers can take advantage of SkyCap Financial’s quick application and a team of experienced individuals who strive to make your experience as smooth as possible. SkyCap Financial bases all their lending decisions on three main factors, current income, credibility, and stability, so they can approve more Canadians, especially those who have been rejected in the past based on credit issues.
Magical Credit is an online lender that offers two types of loan products; Magical Cash Loans and Magical Installment Loans. Borrowers can access up to $1,500 with the Magical Cash Loan and up to $20,000 with the Magical Installment Loan. Magical Credit specializes in bad credit loans, so qualifying with them may be easier compared to traditional banks. Moreover, they accept various government subsidies as income for their Magical Cash Loan, providing greater accessibility to those in need.
LoanMeNow offers Canadian consumers quick access to the cash they need. They offer loans up to $1,000 with no credit check required. Funds are deposited directly into your bank account within as little as 24 hours. A short-term loan from LoansMeNow can help you cover the cost of an unexpected expense or tide you over until your next paycheque. Whatever your financial needs are, LoanMeNow’s quick approval time means you’ll be able to get back on track as soon as possible.
AimFinance is a financial service that provides small personal loans up to $1,000 to borrowers in Ontario and BC. The online application process is quick and easy, and funding is provided in as little as 24 hours. Loan terms range from 9 to 24 months, with interest rates ranging from 29% to 35%. AimFinance focuses on helping bad credit borrowers access credit without the need to undergo a credit check. So, if you have bad credit, you’re still eligible to apply.
Can You Get A Loan To Pay Off A Consumer Proposal Early?
Yes, there are certain lenders that offer specialized loans to help you pay off your consumer proposal early. While these loans come with high-interest rates, it can be worth it to mitigate the impact it has on your credit score.
By paying off your consumer proposal early with a loan, you’ll be able to remove the R7 rating on your credit report faster. However, it’s important to remember that, if your financial situation is the same as before and are unable to make payments, you can end up in more debt than before.
How Can To Get A Loan After Consumer Proposal?
It is difficult to get a loan anywhere when you can’t pass a credit check. However, there are a lot of private lenders who will give you a loan after the consumer proposal. Although the interest rates are high, you don’t have many options, so these private lenders are your best bet.
However, just because you have a down payment or are willing to pay high-interest rates doesn’t guarantee that you will get a loan from a private lender. These private lenders have certain criteria that they expect you to meet in order to qualify for their loans. In order to qualify you typically need:
A job and a verifiable income. If you don’t have either, you will be hard pressed to find anyone willing to lend you money.
Proof that you are making your proposal payments. You need to show them that you are making these payments on time every single month.
3 Steps To Get A Loan After A Consumer Proposal
How To Apply For A Loan After A Consumer Proposal
1. Research Lenders
Before applying with any lenders, it’s important to compare a few lenders to see who can provide you with the best loan offer and if you’re eligible for the loan. You can do so by checking the minimum requirements of each lender and by completing an online loan quote. You can also use a loan comparison platform like Loans Canada, where you fill out a single application to get multiple loan quotes from different lenders you can choose from.
2. Complete The Application
To complete the loan application with the lender of your choosing, you’ll need to provide certain information and documents. This includes a government-issued photo ID, pay stubs, bank statements and some banking details. As a person who filed for a consumer proposal, you’ll also need to show proof of your consumer proposal payments, to ensure you’ve properly completed it.
3. Get Funded
Once you submit your application, you’ll be notified if you’ve been approved or rejected. If approved, you should be funded within a few hours to a few days depending on the lender.
Can I get a mortgage after completing my consumer proposal?
Yes, you can, but it can be quite difficult to qualify for one if you just completed your consumer proposal. The reason is, your credit score will have been greatly impacted by your consumer proposal and it will take time and effort before it’s improved. However, there are many subprime lenders who accept bad credit, but they charge higher interest rates and fees as a result.
How long will it take to get a good credit score after a consumer proposal?
The time it takes to build a good credit score after a consumer proposal depends on a number of factors including time passed, payment history, credit utilization, credit age, credit mix and your credit inquiries. These are all major factors that affect your credit score. Moreover, you’ll have to wait 3 years after completing your consumer proposal to have the negative remark removed.
Can I get a loan from a bank after a consumer proposal?
After a consumer proposal, getting a loan through a bank is difficult, if not impossible. Banks are super risk-averse, so a consumer proposal is seen as a red flag. Even though filing for a consumer proposal is a more responsible option than filing for bankruptcy, banks look at it the same way as they would a bankruptcy, an inability to manage money wisely.
Can I get a loan while still in a consumer proposal?
If you’re still completing a consumer proposal, banks won’t even consider lending you money because you’re still under the proposal. Often, they will make you wait for a considerable amount of time, usually two years, after being discharged before they will even consider you for a loan. However, there are some subprime lenders who offer loans to those who are in consumer proposals, but it is usually to help them pay off the proposal early.
Bottom Line
If you do get a loan through a private lender, make sure you make your payments regularly and don’t fall back into old habits. The goal is to rebuild your credit, not wind up right back where you started. Regardless of whether you get a loan, now is a really good time to set up a budget and cut back on some of your expenses, so that you can pay off your consumer proposal faster and get a head start on your financial future.
Caitlin Wood is the Editor-in-Chief at Loans Canada and specializes in personal finance. She is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. Caitlin has covered various subjects such as debt, credit, and loans. Her work has been published on Zoocasa, GoDaddy, and deBanked. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security.
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