How to Get a Car Loan After Bankruptcy in Canada

December 8, 2018

Financing a car after going through bankruptcy doesn’t have to be stressful, especially when there are companies out there that can help you.

It’s a common misconception that filing for bankruptcy means you are financially ruined and won’t be able to rebuild your credit or obtain a car loan in the foreseeable future. This idea is far from the truth.

According to the Government of Canada, 1 in 6 Canadians will file for personal bankruptcy or file a consumer proposal at least once, so it’s a lot more common than you think. If you feel a little embarrassed or afraid of how this will affect your relationships with lenders in the future or whether you’ll ever qualify for a car loan, you don’t have to be. There are plenty of reputable lenders out there that will approve you for a car loan. There are also a ton of dealerships Canada Drives work with that offer in-house financing and cater to people who have less-than-stellar credit. In fact, some of Canada Drives' dealer partners have specific programs dedicated to assisting anyone going through bankruptcy. 

Filing for bankruptcy means wiping out most of your debts, and the bankruptcy will stay on your credit record for up to six years. Despite this, it is possible to obtain a car loan at a reasonable interest rate.

Managing your expectations

It’s important to be realistic and understand that by filing for bankruptcy, you won’t qualify for the same loan terms as you would have otherwise. Be aware of the terms of your loan, particularly the interest rates, which will be different compared to a person with average credit history. As you are considered high risk after a bankruptcy, your interest rate will also be higher.

While you’ll be less likely to be approved for an expensive new car, there are a ton of great finance & lease options available out there for people who have gone through bankruptcy.

Specifically, Canada Drives can help you find the right vehicle with a lender that fits into your budget.

It’s also important to keep in mind that the process of buying a car may take a little extra time because lenders will require some information from your trustee. However, if you work with the right company, the process should be pretty painless.

Finding the right lender after bankruptcy

If you have just recently gone through bankruptcy or consumer proposal, you won’t have to wait years to get financing for a vehicle. In fact, obtaining a car loan and maintaining your monthly payments can help you with rebuilding your credit. At this point, the most important thing is to avoid other bad debts or negative payment history.

The last thing you want to do is invest time hopping from dealership to dealership being turned down or going to bank only to hear “no.” This is not only frustrating but can also adversely impact your credit.

You should find lenders who are willing to work with individuals who are going through bankruptcy, which is a lot easier than it used to be. Canada Drives can help by matching you with that perfect lender, taking on the task of researching your options for you.

You simply provide us with information about your location and financial circumstance, and they will be able to determine which partner will have the highest chance of loan approval.

Getting your credit report and credit score

Although it may be daunting to get your credit information, it’s a good idea to get an understanding of where you’re at after bankruptcy. After all, the lender will be checking your credit, so you’ll want to see what they are looking at and ensure there are no mistakes, which can happen.

You can obtain a free credit report and score online. Your credit report includes information about previous auto loans, so pay attention to those details. The credit-scoring models used by auto lenders are heavily weighted in the credit score, meaning positive on-time monthly car loan payments will work in your favour when re-establishing your credit.

Refinancing your car loan

Don’t forget, you will have the chance to refinance your car loan at a later date.

You’ll want to keep an eye on your credit score, as you may be able to refinance your car loan at a lower interest rate in the future. If you continuously make on-time payments to your car loan, you will see your score improve after 6 to 12 months.

Get started today

Financing a car after going through bankruptcy doesn’t have to be stressful, especially when there are companies out there that can help you.

Canada Drives has partnered with over 350 car dealers across Canada who offer special financing programs. Thanks to our extensive network, we can quickly match you with a local dealership in your area who can help secure financing for you, regardless of your bankruptcy or other financial situations.

Get started by completing our quick online application and get approved in as little as a few hours.


Apply for Your Car Loan

Your online application takes only 3 minutes to complete and we only ask for information we actually need.

Get Approved Today

Or feel free to call us at