Can I purchase a car while in a consumer proposal?

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Buying a car during a consumer proposal is possible, but it requires your Licensed Insolvency Trustee’s approval, especially for costly purchases. Some lenders might charge higher interest rates due to your consumer proposal status, which can limit financing options.

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Question

Can I buy a car with a consumer proposal? I’m considering buying a car while working through my consumer proposal. I’d like to know if that’s feasible or if it complicates things. What are the rules about buying big-ticket items?

From: Anonymous Question, Ontario (ON)

Debt Insiders Answer

Absolutely, buying a car while you’re in a consumer proposal is doable, but there are some key things you should know. First, you’ll likely need to get the thumbs-up from your Licensed Insolvency Trustee (LIT) before going ahead, especially if you’re eyeing something pricey. They’ll want to make sure you can swing this purchase without messing up your budget or your ability to keep up with your proposal payments. Now, heads up—some lenders might be a bit skittish because of your consumer proposal status, which can mean steeper interest rates or tougher loan conditions. This could shrink your options a bit when you’re looking to finance those wheels.

From: Insider Scott

Office of the Superintendent of Bankruptcy (OSB) Answer

Yes, you can buy a car while in a consumer proposal, but it can complicate your financial situation. According to the Bankruptcy and Insolvency Act, a consumer proposal allows you to negotiate the terms of repayment with creditors, and any large purchases must be carefully considered. Section 66.2(4) of the Act states that you cannot incur additional debt exceeding $1,000 without the consent of the trustee, which typically includes financing a car. If you plan to purchase a vehicle, it’s advisable to consult your licensed insolvency trustee to ensure compliance with the terms of your proposal and to discuss how it may affect your repayment plan.

From: This answer is provided by scanning the OSB Bankruptcy & Insolvency Act and related directives

Related Questions

To address the question of buying a car while under a consumer proposal, here are the top 5 most frequently asked questions, along with brief answers:

1. Can I get a car loan while in a consumer proposal?

You may face higher interest rates or stricter terms, but it is possible to get a car loan.

2. How does a consumer proposal affect my credit score when buying a car?

A consumer proposal can significantly lower your credit score, making it harder to secure favorable loan terms.

3. What are the best options for financing a car during a consumer proposal?

You may need to consider alternative lenders or dealerships that specialize in financing for individuals with poor credit.

4. Can I buy a used car while in a consumer proposal?

Yes, buying a used car might be more feasible due to generally lower prices and potentially easier financing options.

5. How long after completing a consumer proposal can I buy a car?

Typically, you can start rebuilding your credit and applying for car loans shortly after completing your consumer proposal, but it may take some time to improve your credit score.

These questions reflect common concerns and inquiries related to purchasing a car while under a consumer proposal, based on general trends and consumer finance advice in Canada.

If you have a question about debt see our debt questions or ask your own debt related question.

References

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