Can I finance a car during my consumer proposal?

Active vs completed — both are financeable

There are two proposal windows to understand:

• Active proposal. You're making monthly payments to your trustee. Financing is possible but requires trustee sign-off, and you'll work with subprime lenders who specialize in this situation.
• Completed proposal. Your final payment has been made and you've received a Certificate of Full Performance. From here, your credit file still shows an R7 rating for a while, but you move toward near-prime rates as time passes and on-time post-proposal trade lines build up.

Trustee consent — when you need it

Your Licensed Insolvency Trustee (LIT) approved your proposal payment based on a specific monthly budget. A new car payment changes that budget, so most trustees want to see the proposed loan terms before you sign.

In practice: send your trustee the lender's proposed payment schedule, confirm in writing that they have no objection, and keep that email on file. A broker can help you right-size the monthly payment so trustee approval is a formality, not an obstacle.

What lenders actually look at

Since the proposal is baked in, subprime underwriters look past it and focus on:

• On-time payment history on the proposal itself. Every monthly payment to your trustee is indirectly visible through bureau updates. 12+ months of clean payments is a strong positive signal.
• Stable income. Three months of pay stubs or bank statements. No recent job changes.
• Housing stability. Two+ years at the same address beats homeownership status.
• No new collections since filing. A fresh collection during the proposal period is the biggest red flag because it suggests the pattern hasn't changed.

Rates and term expectations

Canadian consumer-proposal-period rates typically fall between 16.99% and 29.99% APR in 2026. Applicants more than 12 months into the proposal with clean payment history often price below the midpoint. Expect:

• Term: 60–72 months is most common.
• Vehicle: Under 8 years old, under 160,000 km.
• Down payment: $0 is possible; $1,000–$2,000 measurably improves both rate and approval odds.

Why a proposal-period loan can actually help

A properly-reported auto loan adds a current instalment trade line to a file that would otherwise be dominated by the R7-flagged settled accounts. Every on-time payment is reported to Equifax and TransUnion, and the fresh positive trade line carries proportionally more weight because it's post-filing activity.

Customers who finance during the proposal period and pay consistently typically exit the proposal 12 months later with a credit score 50–80 points higher than they would have otherwise, and with an already-established relationship with a lender who'll refinance them into near-prime rates at year 24–36.

Common mistakes to avoid

• Applying without trustee consent. Even if a lender approves you, signing a loan that breaks your proposal budget puts your proposal at risk.
• Accepting the first dealership offer. A single finance office submits to a few lenders only. A broker shops many and routes your file to the ones most likely to approve.
• Stretching the term past 72 months to hit a lower monthly payment. Beware the total cost of borrowing — longer terms at subprime rates add up fast.