Yes, you can get a car loan during a consumer proposal. The Bankruptcy and Insolvency Act (BIA) has no rule requiring your trustee’s approval first (consumer proposals are governed by ss. 66.11 to 66.4). Its credit-disclosure offence in s. 199(b) applies only to undischarged bankrupts.
The limit is the lender: you need one that accepts proposal files. You will pay a non-prime rate, which Loans Canada estimates at roughly 19% up to the 35% legal maximum for scores below 560 (estimates, updated July 10, 2026).
A consumer proposal is a legally binding deal, filed through a Licensed Insolvency Trustee, to repay part of your unsecured debt over no more than five years (BIA s. 66.12(5)). Canadians filed 110,168 of them in 2025, 78.4% of all consumer insolvencies (Office of the Superintendent of Bankruptcy, OSB). This guide covers the lender’s side in BC, Alberta and Ontario.
The short answer
- No
The BIA has no rule requiring trustee approval for new credit during a consumer proposal; the $1,000 disclosure offence in s. 199 applies to undischarged bankrupts.
- 19% to 35%
Loans Canada’s estimated APR range for scores below 560, which is where a proposal usually puts you (estimates, July 10, 2026).
- 5 of 8
Of the eight lenders and car-finance sites we checked on October 15, 2026, five say nothing about proposals on their own pages (NotchUp panel finding).
- s. 66.34
Your existing car lender cannot cancel the loan or demand accelerated payment only because you filed (BIA s. 66.34(1)).
On this page 7 sections
Do you need your trustee’s permission?
No: Division II of the Bankruptcy and Insolvency Act (ss. 66.11 to 66.4), which governs consumer proposals, has no provision requiring a Licensed Insolvency Trustee’s approval before you borrow. We read the Act as current to September 21, 2026, on Justice Laws.
Some websites claim BIA s. 66.12 requires written trustee approval for new debt. It does not: it caps the term (s. 66.12(5)) and sets the priority of fees (s. 66.12(6)), and your duties in s. 66.13(1) do not mention new credit.
The disclosure rule people mean is s. 199(b), and it applies to bankruptcy. One edge case: if you file a proposal while already bankrupt, you remain an undischarged bankrupt until the court approves it, because approval annuls the bankruptcy (s. 66.4(2)(d)).
| Question | Consumer proposal | Undischarged bankruptcy |
|---|---|---|
| Trustee approval needed to borrow? | Not required by the BIA (no such rule in ss. 66.11 to 66.4) | Not an approval rule, but disclosure is mandatory (s. 199) |
| Must you tell the lender? | No statutory duty; the proposal shows on your credit report anyway | Yes, for credit totalling $1,000 or more (s. 199(b)) |
| Penalty for not telling | None in the BIA | Fine up to $5,000, up to 1 year in prison, or both |
| Biggest legal risk of a new loan | Falling 3 payments behind and the proposal being deemed annulled (s. 66.31) | Offence under s. 199 if undisclosed |
Your trustee can still end up involved through the lender. Canada Drives writes that “Some lenders will want confirmation from your LIT” that the new payment fits your approved budget (blog post dated June 26, 2026).
Car loan during vs after a consumer proposal
Your car loan options change at three points: while the proposal is active, when you receive a certificate of full performance (BIA s. 66.38(1)), and when Equifax removes the proposal. Equifax removes it 3 years after completion or 6 years after filing, whichever comes first (Equifax; FCAC, July 1, 2026).
- During the proposal, up to 5 yearsLenders see an active proposal, so borrow only if the payment fits beside the proposal payment.
- Last payment and counselling doneThe administrator issues a certificate of full performance; send it to the credit bureaus.
- 3 years after completionEquifax removes the proposal, or 6 years after filing if that comes first.
- Both reports clearShop rates on your file as it stands, and refinance without penalty in ON, BC and AB.
Finishing early shortens the clock. A proposal filed in January 2026 and paid off in January 2028 drops off in January 2031. Run the full five years to January 2031 and the 6-year limit applies instead, so it drops off in January 2032 (our calculation, using Equifax’s rule).
Sources differ slightly. The Financial Consumer Agency of Canada (FCAC) gives Equifax’s rule for both bureaus (July 1, 2026). The OSB lists Equifax at 3 years after completion with no six-year limit. Check both reports with our guide to your free credit report in Canada.
| Stage | What the law says | What a lender sees |
|---|---|---|
| During the proposal | No approval rule for new credit; 3 missed monthly payments deem the proposal annulled (s. 66.31(1)(a)) | An active proposal on your report; the OSB says filers are “assigned the lowest possible credit score” |
| Proposal completed | The administrator must issue a certificate of full performance (s. 66.38(1)); the annulment risk is gone | A completed proposal, still on your report, and a certificate proving it |
| Equifax 3-year mark | No BIA rule left to apply | Equifax removes the proposal; FCAC gives the same rule for TransUnion |
The certificate removes a lender’s main worry: that a missed payment annuls the proposal and revives your old debts (s. 66.32(2)). It is issued unless you refused the required counselling (s. 66.38(2)).
Paying the proposal off early with a new loan is different: the OSB warns a payout “based solely on acquiring new debt can be problematic” (January 11, 2023). See loans during a consumer proposal.
Which lenders take proposal files, and what do they ask for?
Only CarsFast names consumer proposals on a service page. Of the eight lenders and car-finance sites we checked on their own pages on October 15, 2026, five say nothing about proposals at all (NotchUp panel finding). Most proposal car loans go through dealers, who send your file to non-prime finance companies.
| Provider | Channel | Stated policy |
|---|---|---|
| CarsFast | Marketplace | Says its network “specializes in assisting people with all types of credit including consumer proposals” |
| Canada Drives | Dealer referral service | Stopped selling cars itself in 2023; you get pre-approved online and are referred to one of its partner dealers, which runs the credit inquiry. Its blog says lenders want proof your proposal payments are current, and some want your trustee’s confirmation |
| Prefera Finance | Dealer channel | Its Trustee Authorization Form, written for recreational vehicle financing, asks for the filing date, payments made and any missed payments; its site focuses on powersports and RVs, not car purchases |
| Santander Consumer | Dealer channel | For bankruptcy, applicants must be “fully discharged from any bankruptcy proceedings” or have met the trustee’s conditions while awaiting discharge; proposals not mentioned |
| iA Auto Finance | Dealer channel | Serves “near-prime to sub-prime credit markets”; no statement on proposals |
| EdenPark | Dealer channel | Says it qualifies applicants “even those with poor credit”; no statement on proposals |
| LendCare | Dealer channel | Markets non-prime auto financing to dealers; no statement on proposals |
| Rifco | Dealer channel | Describes “full spectrum non-prime lending”; no statement on proposals |
Silence is not a refusal: dealer-channel lenders publish credit rules to dealers, not borrowers.
| Provider | APR as published | Term | Provinces | How to apply | Last verified |
|---|---|---|---|---|---|
| Santander Consumer BankThrough a dealer | Not published | Up to 96 months | BC, AB, ON | Choose a vehicle at a dealer that uses Santander; the dealer submits the applicationRequires minimum income of $1,800/month and finances vehicles up to 10 model years old and 180,000 km. | Oct 15, 2026 |
| Prefera FinanceThrough a dealer | Up to 28.00% | Not published | BC, AB, ON | Through a participating dealer (Dealertrack / Compass Direct Portal)Mainly recreational and powersports financing; its 15-year terms apply to those loans, not cars. | Oct 15, 2026 |
| CarsFastLoan marketplace | Not published | Not published | BC, AB, ON | One online application; matched with lenders and a network of about 350 dealershipsStates it assists 'all types of credit including consumer proposals'. | Oct 15, 2026 |
| iA Auto FinanceThrough a dealer | From 8.99% | Not published | BC, AB, ON | Through a participating dealer; no direct consumer applicationRate Reducing Loan cuts the rate by 10% of the current rate every 12 months if all payments are on time and loan terms are met. | Oct 15, 2026 |
| EdenParkThrough a dealer | Not published | Not published | BC, AB, ON | Through a participating dealerWholly owned subsidiary of Fairstone Financial Inc. (Fairstone Bank of Canada); reports payments to the credit bureaus. | Oct 15, 2026 |
| LendCareThrough a dealer | Not published | Not published | BC, AB, ON | At the dealer's point of sale (dealer uses LendCare's FrontLine portal)Finances vehicles with no age restriction and up to 250,000 km; wholly owned subsidiary of goeasy Ltd. | Oct 15, 2026 |
| Rifco National Auto FinanceThrough a dealer | From 12.90% | Not published | BC, AB, ON | Through a participating dealerDescribes itself as 'Full spectrum non-prime lending' for dealers across Canada. | Oct 15, 2026 |
“From” rates go to the strongest applicants; your rate depends on your credit, income, the vehicle and the term. No provider pays NotchUp for its position in this table, which is sorted by type of provider and then alphabetically. Rates are hidden once a row is more than 30 days past its check. Nothing above 35% APR, Canada’s criminal rate, is ever shown. How NotchUp makes money.
Lenders want proof that your income covers the new payment and that you have kept every proposal payment. Santander Consumer states a minimum income of $1,800 a month (checked October 15, 2026). Prefera’s trustee form asks for your payment history, including any late, missed or NSF payments.
- Your filed consumer proposal and the notice that it was accepted or deemed accepted.
- A trustee letter or payment history showing payments made.
- Your certificate of full performance, if the proposal is finished.
- Proof of income: pay stubs or an employment letter, or tax returns and bank statements if self-employed.
- Proof of address, a driver’s licence, proof of insurance, and a trustee release form if the lender uses one.
What interest rate should you expect?
Expect the poor-credit tier: Loans Canada estimates APRs for scores below 560 at roughly 19% up to the 35% legal maximum (estimates, updated July 10, 2026). That compares with about 12% to 19% for fair credit of 560 to 659.
For comparison, the average chartered bank rate on auto loans advanced was 6.66% (July 2026, Bank of Canada), a benchmark across all credit tiers, not a proposal-era offer. Our car loan rates tracker follows it month by month.
No lender may charge more than 35% APR, the criminal rate since January 1, 2025 (Criminal Code, s. 347). In Alberta, a lender charging 32% or more also needs a high-cost credit licence (Government of Alberta), and BC licenses lenders charging more than 32% (BPCPA, Part 6.3).
| APR | Term | Monthly payment | Total interest | Total repaid |
|---|---|---|---|---|
| 29.99% | 60 months | $485.21 | $14,113 | $29,113 |
| 24.99% | 60 months | $440.18 | $11,411 | $26,411 |
| 18.99% | 60 months | $389.03 | $8,342 | $23,342 |
| 12.99% | 60 months | $341.22 | $5,473 | $20,473 |
Illustration: a proposal-era used car loan at an APR inside Loans Canada's poor-credit estimate
- Amount financed
- $15,000
- APR
- 24.99%
- Term
- 60 months
- Monthly payment
- $440.18
- Cost of borrowing
- $11,410.80
- Total repaid
- $26,410.80
Assumes equal monthly payments, no fees outside the APR and no early repayment. Illustration only, not an offer.
What happens to your existing car loan?
Usually nothing changes, provided you keep paying it. The OSB says you keep your assets as long as you pay your secured creditors. Leases get the same protection from cancellation, and the lessor cannot terminate over rent owed before filing (s. 66.34(2)).
The loan stays outside the proposal
The proposal binds all unsecured claims, but a secured claim only where the lender filed a proof of claim for it (s. 66.28(2)).
The lender cannot cancel because you filed
No one may terminate your agreement or demand accelerated payment only because you filed (s. 66.34(1)), though the lender need not advance more credit (s. 66.34(4)(b)).
Falling behind still costs you the car
The stay of proceedings does not stop a secured creditor from enforcing its security unless a court orders otherwise, and then only for limited periods (s. 69.2(4)).
Equity can count
Hoyes Michalos, a trustee firm, writes that car value above your province’s exemption may be considered in what you offer creditors.
You can return a car worth less
Hoyes Michalos writes that you must return it before the proposal begins, and any shortfall after the sale becomes an unsecured debt in your proposal.
Your province decides the shortfall after a seizure. In BC, once a lender seizes or accepts surrender of consumer goods, your remaining obligations are extinguished (Personal Property Security Act, s. 67(2)). Alberta has a similar seize-or-sue rule when the seller financed the car, including a surrender the seller agrees to (Law of Property Act, s. 53). Ontario has no equivalent, so an Ontario lender can claim the gap.
How do you avoid a bad car deal?
Protect the proposal payment first, because falling three monthly payments behind annuls the proposal (BIA s. 66.31(1)(a)). Then judge every offer by its APR, term and total cost, never by the monthly payment alone.
- Know who earns from your rate. LendCare tells dealers it offers “some of the highest dealer reserves in the industry”. A dealer reserve is the dealer’s share of the interest, so ask whether your rate is the lender’s approved rate.
- Keep the term short. FCAC counts 72 months or more as long-term and warns the total cost is higher. Our down payment guide shows how negative equity builds.
- Plan to refinance. Ontario (CPA 2002, s. 76(1)), BC (BPCPA, s. 74(2)) and Alberta (Consumer Protection Act, s. 68(2)) let you repay a consumer loan in full at any time without penalty.
If a payday loan helped push you into the proposal, see payday loans in a consumer proposal. Provincial repossession and licensing rules differ, and our car loans hub compares them.
Frequently asked questions
Can I get a car loan while I am still in a consumer proposal?
Yes, the Bankruptcy and Insolvency Act does not forbid it, but you need a lender that takes proposal files, usually reached through a dealer. Expect to show on-time proposal payments and a poor-credit rate, which Loans Canada estimates at roughly 19% up to 35% APR (July 10, 2026).
Do I need my trustee’s approval to finance a car during a consumer proposal?
No, the BIA’s consumer proposal rules (ss. 66.11 to 66.4) contain no such requirement. Canada Drives writes that some want your trustee’s confirmation that the payment fits your budget. Your proposal’s terms also bind you, so read them before you sign.
Do I have to tell a lender about my consumer proposal?
The BIA’s disclosure offence in s. 199 applies to undischarged bankrupts borrowing $1,000 or more, not to people in a consumer proposal. In practice the lender will see the proposal on your Equifax or TransUnion report, so be upfront and answer application questions truthfully.
How soon after a consumer proposal can I get a better car loan rate?
Options usually improve once you hold a certificate of full performance. They improve again when the proposal leaves your report 3 years after completion or 6 years after filing, whichever is first (Equifax). Ontario, BC and Alberta allow full prepayment of consumer loans without penalty, so you can refinance when a better offer comes.