Welcome to The Bankrupt Car Loans Frequently Asked Questions page. This page is an effort by a team of experienced professionals to help regular people understand bankruptcy.
Although most of the Bankruptcy FAQ page answers questions that International & American Bankrupts may find helpful, it is focused on Personal Bankruptcy in Ontario, Canada and does not discuss American bankruptcy law or bankruptcy in any other country or province.
If you have questions regarding American Bankruptcy or any other Country/Provinces bankruptcy law, please contact a qualified source for that region.
Important: New Canadian Bankruptcy Laws
Make sure you check out the Bankrupt Car Loans Blog Post to get familiar with the new amendments to Canadian bankruptcy law. These changes have a significant impact on bankruptcy in Canada and began as bankruptcy law in September 2009.
While the new bankruptcy laws are not all good, there is some good news for Canadians:
In Canada secured lenders (such as auto finance companies) can no longer terminate a sales contracts just because you filed bankruptcy. That means if you have a car loan and you decide to file bankruptcy or consumer proposal your car loan cannot be seized or repossessed unless you default on your payments.
This is great news for bankrupt Canadians paying their car loans on time.
Learn all about the New Canadian Bankruptcy Laws.
What is Bankruptcy?
Bankruptcy is a legal way of declaring ones inability to pay back debt owed to their creditors. Filing a bankruptcy in Canada is generally considered an unfortunate but sometimes necessary step towards clearing debt and starting financial recovery.
If you file bankruptcy you are asking the courts to intervene between you (the debtor) and those you owe money too (creditors).
Once in bankruptcy you are required to pay a pre determined amount of money at specified intervals. This fee is generally referred to as a trustee payment and is usually paid monthly.
After making your regular trustee payments on time, attending counseling sessions and working with your trustee in bankruptcy for 9 months, the courts will discharged your bankruptcy.
In exchange for successfully completed your bankruptcy your debt will be absolved and you will no longer owe money to the creditors included in your bankruptcy.
Your creditors, as part of the bankruptcy, are required to accept a settlement on the outstanding loans. In exchange for receiving a settlement, they are no longer permitted to seek legal or collection recourse from you.
Are there Different Types of Bankruptcy in Canada?
Yes. In Canada there are two different types of bankruptcy. There is a traditional bankruptcy where an individual or business files bankruptcy when they can no longer afford to pay their creditors and there is also the consumer proposal, a longer and more involved bankruptcy alternative.
A Consumer proposal cannot be filed by a business.
What is a Consumer Proposal?
A consumer proposal is an alternative to personal bankruptcy. Technically it is not a bankruptcy however its similarities lead most financial institutes in Canada to treat it as a form of bankruptcy.
A traditional bankruptcy in Canada usually lasts for 9 months. A consumer proposal can last as long as 5 years. The size of the monthly proposal payments and length of the insolvency largely depend on the amount of debt owed and the results of creditor negotiations.
If the insolvent individual chooses to file consumer proposal in lieu of bankruptcy a settlement is negotiated and offered to their creditors. The individual’s creditors have up to 45 days to accept or decline the offer of consumer proposal.
In most cases a creditor will accept the consumer proposal offer, since their only other option is the debtor filing a personal bankruptcy. For creditors, the consumer proposal is favored over the proposal because its negotiated terms often lead to the creditor receiving more money than they would in bankruptcy.
In order to qualify for a consumer proposal an individual must be considered insolvent and owe at least $5000 to creditors. The maximum amount allowed in a regular consumer proposal is $75,000. A consumer proposal may not include a mortgage.
When consumers apply for a car loan they will find that many auto loan centers treat consumer proposals and bankruptcies the same. The rules or processes for getting a bankruptcy auto loan or an after bankruptcy car loan are very similar for both consumer proposals and bankruptcies in Canada – However, BankruptCarLoans.com focuses on auto financing and bankruptcy.
For more detailed information regarding consumer proposals in Canada please contact a trustee in bankruptcy, an insolvency lawyer or another qualified source.
What do Bankruptcies do?
If used properly Bankruptcy helps protect individuals and creditors from experiencing a financial worst case scenario. A financial worst case scenario can have severe impact on both the debtor & creditor.
The worst case scenario for a creditor is very different from that of a debtor. Here is a brief description of a financial worst case scenario for both a consumer and a lender:
For an individual, the avoidable scenario involves drawn out collection calls, written off credit, court judgments, wage garnishments, embarrassment, bad credit ratings, asset seizures and auto loan repossessions.
For a creditor, a worst case scenario involves increased collection, court and employee expenses. In addition to the extra costs a creditor can suffer large financial losses on both secured and unsecured loans (such as credit card write offs or unpaid car loans).
There can be bigger risks for the creditor suffering from increased expenses or large financial losses as well. If the creditor’s business model takes on too many of these increased expenses and losses they could experience a cash flow problem that could threaten their ability to stay in business.
Bankruptcy & Bankruptcy Laws are designed to offer fair treatment to both the debtor and the creditor. The best case scenario in a bankruptcy is an individual discharged from debt with a clean slate of credit and a creditor receiving fair settlements and reduced losses allowing them to continue operating.
Who Files Bankruptcy?
Bankruptcy can be filed by individuals or businesses. In Canada a person or business that is considered insolvent has the right, thru law, to file bankruptcy via a trustee in bankruptcy and the Canadian court system.
Bankruptcy is filed by businesses or individuals that are considered insolvent or unable to pay back debt owed to their creditors.
What Happens in Bankruptcy?
During a bankruptcy the bankrupt is required to work closely with their trustee and provide them with any information they may require. This includes keeping them informed of their current living address, employment earnings, any major changes in their life and even their expenses. The trustee in bankruptcy requires this information to ensure that all laws are being followed and to support their client by accurately monitoring their bankruptcy progress.
Sometimes during a bankruptcy, if the Canadian Superintendent of Bankruptcy requires it, the bankrupt will be asked to attend meetings with their creditors. Any creditor meetings required will always occur with the trustee present.
In a bankruptcy there can also be counseling sessions with the trustee. These bankruptcy sessions are essentially meetings with the trustee and are used to update progress, rehabilitate bad credit practices and help educate individuals on how to prevent future bankruptcies.
What is a Trustee in Bankruptcy?
A trustee in bankruptcy is essentially a bankruptcy officer. Trustees are licensed and regulated by the Canadian federal government. You cannot file a bankruptcy in Canada without attaining the services of a trustee in bankruptcy.
The role of a trustee in bankruptcy is to administer, support and file bankruptcies on behalf of individuals and businesses. They are also tasked with managing assets held in trust, while ensuring the rights of both the debtor and creditor are always respected and enforced.
A trustee in bankruptcy also acts as a counselor and advocate for businesses, individuals and creditors. The trustee is specialized in Canadian bankruptcy law and Canadian credit law. Their duties often include offering credit advice and working with their clients to prevent bankruptcy.
If an individual in bankruptcy is looking for a car loan, then the council of the trustee is valuable to both the loan applicant and the auto finance company. The trustee, depending on their financial situation, can recommend or even suggest against the bankrupt applying for a credit. Auto lenders underwriting credit applications may even look to the trustee for an assessment of the bankrupts financial and bankruptcy history. This information, like income level and credit history can directly affect the outcome of a consumer credit application.
A bankruptcy trustee also acts as a mediator between the debtor and the creditor, helping to negotiate the terms of the bankruptcy and the loan settlements.
Bankruptcy and Trustees in Bankruptcy are both regulated by the Canadian Federal Government and the Bankruptcy and Insolvencies Act. The Superintendent of Bankruptcy regulates and licenses all trustees in bankruptcy throughout the country. Their office has more than 300 employees dedicated to upholding Canadian Bankruptcy Laws and regulation. They also ensure that each trustee in bankruptcy is qualified by making sure they attend and pass a 3 year bankruptcy law course, adhere to specific education prerequisites and also ensure each candidate is screened by the RCMP.
To summarize, a trustee in bankruptcy is the starting point for an individual or business that is considering a bankruptcy. They are also the only agents qualified to file or administer bankruptcy in Canada.
A trustee is a resource and support system to help you get past bad credit, while you look forward to being debt free and in control of your financial future!
When are Bankruptcies Filed?
In Canada a bankruptcy can be filed only after a business or individual is considered insolvent. In most cases a bankruptcy is filed after a debtor has repeatedly struggled trying to pay their debt, determined they cannot catch up on late payments and can no longer meet their credit obligations.
A Bankruptcy can also be filed in advance of a debtors credit struggles. This usually happens when an individual or business determines that bankruptcy is unavoidable.
Sometimes a pre-emptive bankruptcy can save both the debtor and creditor a lot of time, money and collection calls.
Although bankruptcy often follows irresponsible debt management or poor credit decisions, it can also occur at other times. Sometimes a sudden job loss, a death in the family or other uncontrollable events can cause financial problems and lead to bankruptcy. A good example would be when a major corporation files bankruptcy or makes significant job cuts.
A large company going bankrupt can sometimes lead to a domino effect where other related businesses are forced to file bankruptcy.
If a major corporation, such a General Motors files bankruptcy there can be a major impact on the surrounding economy. It is then possible that the bankrupt company can indirectly force their suppliers, employees and other business partners to suffer financial losses big enough to cause bankruptcy.
General Motors has working contracts with multiple companies such as parts manufacturers and material supplies. Many of those companies were formed to support product demand directly tied to GM’s growing market share. Because so much of their business revolves around the success of GM, it is safe to say that many of these companies cannot exist without General Motors. Therefore a bankrupt General Motors can lead to a bankrupt supplier.
That is only one example of the many indirect causes of bankruptcy. Other examples include bankruptcy brought on by divorce or physical injury leaving a person unable to work or pay their medical bills.
In summary, bankruptcies are filed all the time and for different reasons. Bankruptcy can be both a reaction to an event and also a symptom of a problem.
How Long Does a Bankruptcy Last?
A regular personal bankruptcy will last 9 months. After 9 months in bankruptcy the consumer will receive an automatic discharge by the courts. A bankruptcy can last longer than 9 months if:
- There has been one or more bankruptcies filed in the past
- The bankruptcy payments are late or the trustee is being paid poorly
- The bankrupts income is in surplus of what they originally stated
If any of these circumstances are present, especially multiple bankruptcies, then the insolvent may be required to have their bankruptcy reviewed by a judge and the bankruptcy discharge may be delayed.
If you file bankruptcy, the trustee must be made aware of any previous bankruptcies, even if they are past the 7 year mark and no longer visible on your credit bureau.
How Much Does Bankruptcy Cost?
The costs of bankruptcy can vary. If you are filing bankruptcy with assets then the trustee will be compensated from the liquidation of assets. If you are filing bankruptcy without assets, then you will either pay the trustee a set fee (such as a retainer) or be put on a payment plan that covers the bankruptcy disbursements & trustee fees.
When filing a personal bankruptcy or a consumer proposal, you are assigned monthly trustee payments. Those payments are calculated based on a number of variables, the biggest being the size of the bankruptcy.
Because a consumer proposal pays back the creditor more than a bankruptcy, the trustee fees are usually larger. In most consumer proposals the creditor is being paid back 30% to 50% of the debt owed to them.
Is Bankruptcy Legal?
Yes, bankruptcy is legal! In fact bankruptcy is government by law and actually protects both the debtor and creditor from any illegal or unethical credit activity.
In Canada Bankruptcy is enforced by Federal Law and defined by the Bankruptcy and Insolvency Act.
In order to qualify for a Bankruptcy in Canada the individual or business must be considered Insolvent. If an individual or business is prepared to file bankruptcy, they are required to attain the services of a trustee in bankruptcy. The trustee will then administer the bankruptcy under bankruptcy law.
Every country, and in some cases each American State, have their own bankruptcy laws. For example the United States has 7 different types of Bankruptcy, which can vary from state to state.
Is Bankruptcy a Bad Thing?
Bankruptcy is a tool used to end collection calls, curb financial crisis, reduce creditor losses, fix bad credit and give consumers or businesses a “fresh start”. Just like any tool used to repair a problem, bankruptcy is only effective when it’s the right tool for the job.
So if a personal bankruptcy is the right choice, then bankruptcy is a good thing. However, if bankruptcy is not right choice, then filing a personal bankruptcy can be a bad decision.
For an individual or business, bankruptcy can help reboot a trouble financial situation, repair bad credit history and lead to a better future. Bankruptcy can be a mistake if it’s decided in haste or based on the advice from an unqualified source. That’s why seeking a certified trustee in bankruptcy and insolvency lawyer is so important.
Remember: filing bankruptcy in Canada is a big decision, not only does it require you to know the facts but it also requires a clear understanding of how bankruptcy will affect your unique situation!
Should I File Bankruptcy?
If you are considering bankruptcy or someone is suggesting bankruptcy, then it might be time to seek out a trustee in bankruptcy. A trustee in bankruptcy is a great starting point but it should never be your only source.
Doing your own research is one of the best ways to find out if bankruptcy is right for you. Although a trustee in bankruptcy is bound by law to give honest and practical bankruptcy advice, you shouldn’t rely entirely on one. The internet, a bankruptcy lawyer, your local library and the office of the Superintendant of Bankruptcy are all excellent sources for bankruptcy information. Use those sources to educate yourself on bankruptcy.
A lack of Bankruptcy education is one of the main reasons people file unnecessary bankruptcies. If you’re considering bankruptcy then it would be irresponsible not to understand it. So please, make sure you’ve spent time reading about bankruptcy before you make your decision.
Once you’re comfortable with the concept and aware of how bankruptcy will impact your life. Its time to apply everything you know to your unique financial and credit situation.
If you’ve decided you’re ready for bankruptcy it’s paramount that you get counsel from a trustee in bankruptcy and also a lawyer you trust.
The goal of a bankruptcy is to help you. If you’re not certain that a personal bankruptcy will have a positive impact on your credit history and financial situation, then maybe bankruptcy isn’t right for you.
Filing bankruptcy is a deep and personal question that only you can answer. Please take your time and only rely on qualified sources you can trust.
What is Bankruptcy Protection?
Bankruptcy Protection is a blanket term often used to describe bankruptcy itself. Bankruptcy Protection is more of a shout out to one of the main benefits of bankruptcy rather than an actual definition.
The word protection is used because a major benefit to bankruptcy is the protection it offers the debtor. Bankruptcy protects the consumer by offering a safe haven, free of collection calls and wage garnishments. While in a bankruptcy a debtor is protected from their creditors and the collection methods they use.
A bankruptcy also offers protection from any legal or financial action the creditor may take, such as registering liens, judgements or filing write off collections to a person’s credit bureau.
A quick example of creditor action is when an auto finance company makes collection calls on a past due car loan. After trying to collect late car payments over the phone, the credit might be forced to repo the car loan. After repossession, the car is sold at auction and the consumer is left with the balance owing.
If a person files bankruptcy in Canada, their creditors are bound by law to stop contacting them and cease all collection methods. That means no more collection calls and in cases where the debtor agrees to catch up their late car payments, no car loan repossession.
How Does Bankruptcy Stop Collection Calls and Offer Protection?
If a debtor is unable to pay their debt (car loans, credit cards or other loans) and starts missing payments, collection agencies may begin contacting them. Once past due on a loan, the debtor becomes part of this unpleasant collection system which is full of past due notices and collection calls.
At this stage, the collection agency (hired by the creditor) will begin contacting the debtor in person, by mail or with collection calls until they secure past due loan payments. If the late payments are not made up the collector may take a more serious step such as writing off the loan as bad debt or repossessing secured auto loans or other assets.
Bankruptcy can protect a consumer from collection calls, auto loan repo or other creditor lawsuits. The protection aspect of a personal bankruptcy works like this:
Once a vehicle has been repossessed, the creditor will usually sell the vehicle at auction. Because of depreciation the money owed on the car loan is usually greater than the vehicle value. In this common scenario the creditor will take a financial loss on the auto loan.
The loss incurred by the auto lender is then transferred to the debtor. Even after having their vehicle reposed, the debtor is still responsible for this amount. In Ontario a bank or auto lender has the right to sue for the remaining balance of the car loan. This leaves the debtor with a big bill and no car.
If the same individual struggling to pay their car loan were to file bankruptcy, then the situation would change dramatically. Depending on the creditor they may have the option return the vehicle and include it in bankruptcy or keep the car loan outside of bankruptcy.
If the debtor chooses the first option and includes their car loan in bankruptcy then the vehicle will need to be returned. Once the loss on the auto loan has been finalized, the creditor will update the trustee and the auto loan loss amount will be included in the bankruptcy.
If the debtor decides to continue making payments on the car loan, the creditor may allow them to keep it. In this scenario the debtor is agreeing to bring their late payment up to date and make their future car payments on time.
Because the auto loan is excluded from the bankruptcy, it is expected to be one of a few monthly obligations the debtor is left responsible for. The decrease in the debtors overall monthly debt should make paying the car loan easier.
The reduction in monthly debt is a positive aspect of bankruptcy but it’s the protection from collection calls and the repossession that really stand out in this example.
Unlike the debtor in the example, a bankrupt consumer is given a choice – keep the car loan and free up enough income to make auto loan payments on time or return the vehicle and absolve the car loan deficiency into bankruptcy.
How Common Are Personal Bankruptcies in Canada?
In Canada and the United States bankruptcy is becoming very common. Over recent years North American bankruptcy rates have risen dramatically.
To better answer the question “How common are personal bankruptcies in Canada?” you’ll need to look at some numbers.
In Canada a number of bankruptcy studies are done on an annual basis, some more accurate than others. BankruptCarLoans.com only uses Canadian based statistics from reliable sources. The following statistics of bankruptcy and insolvency come from Industry Canada and are detailed in our Bankruptcy FAQ question: “How common is Bankruptcy?”
What are the Canadian Bankruptcy Statistics?
Bankruptcy numbers in Canada are unfortunately increasing every year. This increase in personal bankruptcy filings is not unique to Canada. Many other countries, including the US are seeing more and more bankruptcies.
According to Canadian bankruptcy statistics the total number of consumer bankruptcies filed in 2008 was 87,981. That’s an increase of 9% over 2007 Canadian Bankruptcies, which are recorded at 80,050. These bankruptcy stats are alarming because they represent a large increase over the previous year.
The increase in consumer proposals filed in Canada is even more significant. In 2007 21,413 Canadians filed consumer proposal. 2008 consumer proposal statistics are up 14.7% with 24,554 Canadian consumer proposals filed.
Another interesting bankruptcy statistic shows an overall decrease in businesses filing bankruptcy. That news is good. Unfortunately, those same bankruptcy statistics show an increase in the number of consumer bankruptcies being filed. This is likely attributed to our current recession, an increase in recent job layoffs and rising National unemployment levels.
* Canadian Statistics for Bankruptcy from Industry Canada
At What Age Do People File Bankruptcy in Canada?
To answer this question we need to look to Canadian bankruptcy statistics compiled by Industry Canada. These bankruptcy demographic stats are taken from 2006. Please note that these Canadian bankruptcy stats are based on numbers from 2006 and consider all insolvent consumers in Canada:
Canadian Bankruptcy Statistics – Average Age of Debtor:
Average Age of Canadian Debtor (based on type of insolvency)
- Canadian Bankruptcy: 43.4 years old.
- Consumer Proposal: 42.9 years old.
* Canadian Statistics for Bankruptcy from Industry Canada and based on 2006 numbers
Do Men or Women File Bankruptcy More Frequently?
This is another question that requires pulling Canadian Bankruptcy numbers from a report by Industry Canada. Again, these numbers are based on all Canadian Insolvencies in 2006:
Canadian Bankruptcy Statistics – Bankruptcy Gender
- 55.2% of Bankruptcies filed in Canada were filed by Men
- 44.8% of Bankruptcies in Canada are filed by Women
Canadian Bankruptcy Statistics – Consumer Proposal Gender
- 57.4% of Consumer Proposals filed in Canada were filed by Men
- 42.6% of Consumer Proposals in Canada are filed by Women
* Canadian Statistics for Bankruptcy from Industry Canada and based on 2006 numbers
I Have a Car Loan What Happens if I File Bankruptcy?
If you have a car loan and file bankruptcy you have two options. Depending on your payment history, the size of the car loan, your employment situation and the actual bankruptcy, you may only have one choice.
If you are currently past due on your car loan, the creditor may seize the vehicle or ask you to surrender it.
If you are not late on your auto loan payments then it’s possible the creditor will let you keep the car loan outside of your bankruptcy. If you keep the car loan outside of bankruptcy then you must continue to make your payments.
Can I Apply for Credit in Bankruptcy?
Yes, if you file bankruptcy you can still apply for credit. However, bankruptcies report to credit bureaus, so any loan applications you submit will also reveal your insolvency.
The bankruptcy reporting on your credit bureau is considered a significant risk factor to banks and other financial institutions. If you do apply for credit in bankruptcy or after bankruptcy, you will probably be denied.
This is direct result of the bankruptcy and the bad credit history leading up to the bankruptcy. Fortunately, there are ways to get approved for a loan while in bankruptcy.
One of the main credit options available to bankrupts is a called a secured credit card. A secured credit card is a guaranteed credit card. No matter how bad your credit is, you will always be approved for a secured card.
Another bankruptcy credit solution is the Subprime Loan. A Sub-Prime or Non-Prime loan is a loan issued at a higher interest rate. A regular bank interest rate is considered a prime rate. Therefore an interest rate for a customer with bad credit, who otherwise wouldn’t be approved, is called a subprime interested rate.
Although the interest rate on subprime credit is usually higher than a regular loan, it is still often the best option available for bankrupt consumers or individuals with a bad credit history.
Can I get a Car Loan in Bankruptcy?
Yes. If you file bankruptcy you can get a car loan. In fact, some banks in Canada will even approve a car loan within days of filing bankruptcy.
Because bankruptcy rates are rising along with consumer demand for car loans, it’s only natural that many banks in Canada are starting to offer car loans to bankrupt consumers.
This new type auto loan solution is also helping Canadians with bad credit or new credit get car loans.
Will a Car Loan Help Repair my Bad Credit?
For many consumers, a past bankruptcy or bad credit in Canada can be a burden holding them back in life. Sometimes the only way to repair bad credit or rebuild credit after a bankruptcy is to get another loan.
An after bankruptcy car loan or an auto loan during bankruptcy is one of the strongest loans you will ever get. If you get approved for an after bankruptcy car loan and you make your car payments on time, then you are not only building good credit, you are also repairing bad credit.
A strong post bankruptcy credit history is one of the best ways to make sure your next car loan, credit card or mortgage is approved at a lower interest rate!
What Type of Auto Loan is Available in Bankruptcy?
The type of auto loan you qualify for in bankruptcy is based on a number of factors. However in most situations a bankrupt consumer will only qualify for a non prime or sub prime car loan.
Below we detail the differences between a regular prime loan and a subprime loan:
Prime, Sub Prime and Non Prime
Prime is considered a regular bank interest rate and is dependant on the Bank of Canada’s interest rate. Non prime or sub prime simply means “not prime” or “below prime” and is based on a number of factors including overall credit risk.
A non prime or sub prime loan generally has a higher interest rate than a regular prime loan.
What Kind of Vehicles Qualify for Bankruptcy Car Loan?
Bankruptcy car loans are not limited to any specific vehicle make or model. That means, under the right circumstances you can even qualify for financing on a brand new Ferrari. Of course, that would be a very unique situation and depend on several factors.
The size of a car loan is based on affordability, credit risk, monthly car payment and income level. The size of the auto loan and the type of vehicle approved are often related to each other.
Other approval factors include the model year of the vehicle, vehicle condition, cash money down and of course consumer credit history.
After bankruptcy auto loans and bankrupt car loans are available all over Canada from almost every brand of car dealership. Both new car and used car dealerships work closely with Special Finance centers to get bad credit auto loans approved.
If you’re bankrupt or recovering from a past bankruptcy you are not limited to any specific type of car.
Who approves car loans after bankruptcy?
In Canada there are several sources for after bankruptcy car loans and in bankruptcy loans. The main sources for bad credit auto loans or post bankruptcy car loans are banks, special finance centers, captive lenders and car dealerships.
Banks
Major financial institutes will occasionally approve bad credit loans or after bankruptcy car loans. The banks often base their credit decisions on the applicants beacon or fico score, which is a rating system used by credit bureaus. Because a bankruptcy or slow credit history will lower a credit score, a regular bank approval may not be available. There are exceptions to this, which can be based on the applicant having a co-signor, a lot of cash down and other variables.
Many of the major banks in Canada also have their own Special Finance program or department. So a prime decline from a financial institution, may still find an approval in that same banks subprime auto division.
Special Finance Companies (Subprime Auto Lenders)
In addition to regular banks, there are also financial institutions that specialize in subprime loans and bankruptcy credit.
Under the right conditions many of these ‘special finance’ companies will approve a post-bankruptcy auto loan.
Captive Automotive Lenders
A captive automotive lender is a finance company that is either owned by or partnered exclusively with a car manufacturer. For instance General Motors and Toyota both have their own captive finance centers.
Because they share a common goal with the manufacturer, captive lenders tend to be more flexible than a regular bank. So a consumer with a prior bankruptcy or other credit problems might find it easier to get approved on a car loan thru a captive then they would with a bank.
Car Dealership In House Financing
While many car loan applications are sent to banks, there are also a number of car dealers in Canada who do their own financing in house. If a dealership cannot get you approved for a car loan they may consider lending you the money themselves.
In house financing can be an additional profit center for a car dealership but is generally a tool used to sell more cars. It is less credit risk and effort for a car dealer to have a bank or auto lender finance their customers.
Just like a regular bank loan an in house lease or auto loan is based on overall credit risk. Because the dealer is in control and the process is more hands on, the loan parameters can change. The main difference between a bank auto loan application and an in house application is usually the dealer-customer relationship.
If a car dealership is ready to sell you a car and you do not qualify for regular financing, then they may consider approving your loan by taking a closer look at other non financial or credit variables such as their relationship with you.
Please Note: BankruptCarLoans.com does not endorse or recommend specific banks or finance companies. There are many great options for auto financing in Canada but to remain neutral we do not list them. A trusted car dealership or bank can always recommend multiple finance options for bankruptcy or after bankruptcy car loans.
How Do I Get a Bankrupt Car Loan?
Getting a bankrupt car loan or after bankruptcy auto loan is easier than you think. The internet, your local car dealership and even your regular bank branch are all great places to start.
If you want to find out if you qualify for a bankruptcy car loan or learn what factors you should consider, please visit our Get A Car Loan page now.
Thank you,
The Bankrupt Car Loans Team.
