Consumer Proposal Loans: 5 Realistic Options While You Are Still Paying
Consumer proposal loans are loans taken while a consumer proposal is still active, approved on your employment income because the R7 rating on your file rules out the banks. In Canada that realistically means payday loans of $100 to $1500, income-based installment loans of $500 to $10000, and three secured or co-signed routes.
- Free to apply, checking your options does not hurt your credit score
- Licensed Canadian lenders only, provincial rules and rate caps enforced
- E-transfer funding as soon as today, bad credit welcome
Why Do Banks Refuse Consumer Proposal Loans?
Banks refuse consumer proposal loans because an active proposal appears in the public records section of your credit report and every included account carries an R7 rating, and bank underwriting treats an active insolvency as an automatic decline. The refusal is a policy rule, not a judgement about your current income.
A consumer proposal is a legal arrangement under the Bankruptcy and Insolvency Act in which you repay a portion of unsecured debts up to $250000 (excluding a mortgage on your principal residence) over as long as 5 years, and only a Licensed Insolvency Trustee can file and administer one. To a bank, that file says you have already told creditors you cannot pay in full. It does not matter that you have made every proposal payment on time.
A proposal also differs from bankruptcy in ways that matter to the lenders who do say yes. You keep your assets, the monthly payment is fixed for the life of the proposal, and there is no surplus income calculation adjusting it each year. That means the paycheque a lender sees in your bank account is the whole picture, with the trustee payment as one predictable line.
What changes the picture is the lender type. Payday and income-based installment lenders decide on your last 90 days of bank deposits rather than on the public records section, so the same application a bank declines in seconds is often approved by them the same day. Our homepage explains what they look at instead of a score under do payday lenders check my credit.
What Does the R7 Rating Mean for Consumer Proposal Loans?
R7 means the account is being repaid through a consumer proposal, consolidation order, or similar arrangement, and it sits two steps above the R9 that a bankruptcy leaves. For consumer proposal loans that matters because many lenders treat R7 as a borrower who chose to repay something rather than nothing.
| Rating | Meaning | How lenders read it |
|---|---|---|
| R1 | Paid as agreed | Prime |
| R2 to R5 | 30 to 120 days late | Subprime, income-based approval |
| R7 | Repaying through a consumer proposal or similar arrangement | Declined by banks, considered by income-based lenders |
| R8 | Repossession | Declined by most |
| R9 | Bad debt, collections, or bankruptcy | Declined by banks, income-based lenders only |
The proposal itself stays on your Equifax and TransUnion reports for 3 years after you complete it or 6 years after filing, whichever comes first, so a 5-year proposal is gone about 1 year after the last payment. That is a shorter shadow than the 6 to 7 years a bankruptcy leaves, which we cover in our guide to loans after bankruptcy. Pull your report free from Equifax to confirm the included accounts show R7 with the proposal noted.
What Are the 5 Realistic Consumer Proposal Loans?
The 5 realistic consumer proposal loans are a payday loan, an income-based installment loan, a secured credit card, a loan secured against a vehicle or savings, and a co-signed loan. Two of them are unsecured and available online the same day; three depend on an asset or another person.
| Option | Amount | Cost | Approval rests on |
|---|---|---|---|
| Payday loan | $100 to $1500 | $14 to $17 per $100 | Income and bank account |
| Income-based installment loan | $500 to $10000 | 18% to 35% APR | Income, deposits, debt ratio |
| Secured credit card | $200 to $5000 limit | Annual fee plus card interest | Cash deposit |
| Vehicle or savings secured loan | Up to the asset's value | Mid range, asset at risk | Clear ownership of the asset |
| Co-signed loan | Set by the co-signer's file | Near prime | The co-signer's income and credit |
The application on this page matches you with the first two. The secured card is worth adding regardless, because a $500 deposit card paid in full every month starts building R1 history beside the R7s while the proposal is still running. A co-signed loan is the cheapest money on the table but puts the co-signer on the hook for the whole balance if you miss a payment, and our guide to guarantor loans explains that conversation.
Check your loan options nowWhat Do Payday and Installment Lenders Check on Consumer Proposal Loans?
They check that you have steady employment income deposited to a Canadian chequing account, that the account has been open about 3 months, that recent months show few or no NSF events, and that the new payment fits alongside your proposal payment. Most verify all of it through instant bank verification, a read-only 60-second look at your deposits.
Typical thresholds mirror the homepage: age of majority, income from a full-time or part-time job of roughly $1200 to $1800 net per month or more, and a working phone and email. Payday lenders rarely ask about an active proposal at all. Some installment lenders do ask, and a few decline any active insolvency as policy, which is why applying for consumer proposal loans through a service that matches you with several lenders beats applying to one and hoping.
The proposal payment counts as an existing obligation. If you pay $300 a month to your trustee and earn $2800 net, an installment lender working to a 40% ratio has about $820 of room for everything else, including the new loan. That arithmetic, not the R7, is what decides the amount you are offered.
Having three things ready shortens the process to minutes: your online banking login for instant verification, your most recent pay stub in case a lender asks for it, and the monthly proposal payment amount so you can state it accurately. Applications that guess at the proposal payment or skip the verification step are the ones that stall into the next business day.
Do You Need Trustee Permission for Consumer Proposal Loans?
No, the Bankruptcy and Insolvency Act does not require you to get your trustee's permission before borrowing during a consumer proposal, and there is no disclosure rule like the $1000 threshold that applies to an undischarged bankrupt. Two things still make a call to the trustee worthwhile.
First, read your proposal terms, because a small number contain a clause about new credit, and breaking a term can affect your standing. Second, your trustee has seen what happens when a proposal borrower takes on a payday loan cycle, and a five-minute conversation about whether the loan fits your budget is free. The Office of the Superintendent of Bankruptcy explains your rights and duties during a proposal in plain language.
What a new loan can never do is join the proposal. Debts included in a consumer proposal are fixed at the filing date under the Bankruptcy and Insolvency Act, and anything you borrow afterward is entirely yours to repay in full alongside the proposal payments.
What Do Consumer Proposal Loans Honestly Cost?
Consumer proposal loans cost $14 to $17 per $100 for a payday loan and 18% to 35% APR for an installment loan, and because an active proposal places you near the top of the risk band, expect the upper end of each range. The table shows what that means in dollars.
| Loan | Term | Payment | Total repaid | Cost of borrowing |
|---|---|---|---|---|
| $300 payday at $15 per $100 | 14 days | $345 once | $345 | $45, about 391% APR |
| $1000 payday at $15 per $100 | 14 to 62 days | $1150 once | $1150 | $150 |
| $1000 installment at 35% APR | 12 months | $100 a month | $1200 | $200 |
| $2000 installment at 35% APR | 24 months | $117 a month | $2808 | $808 |
| $5000 installment at 32% APR | 36 months | $218 a month | $7848 | $2848 |
The federal criminal interest rate in section 347 of the Criminal Code caps installment lending at 35% APR, and provincially regulated payday loans of $1500 or less are the only exception. Quebec effectively caps all lending at 35% APR, so payday loans are not offered there and Quebec borrowers in a proposal use small installment loans instead. Full provincial fee caps are on the homepage under how much do payday loans cost.
Notice that the $1000 payday loan and the $1000 installment loan cost within $50 of each other, but one comes out of a single cheque and the other spreads over 12 months at $100. For a borrower already sending $300 a month to a trustee, the second shape is usually the one the budget can carry. Our guide to bad credit installment loans has the full payment tables by amount and term.
Two costs that are not on the table matter just as much. A returned payment usually triggers an NSF fee from your bank and a returned payment fee from the lender, each commonly $25 to $50, and a missed proposal payment caused by that shortfall costs far more than either. Price the loan on the assumption that both payments must clear every month.
How Could Consumer Proposal Loans Put Your Proposal at Risk?
A new loan puts a proposal at risk when its payment crowds out the trustee payment, because a consumer proposal is deemed annulled once you fall 3 monthly payments behind, and an annulled proposal revives every original debt with its interest. That single rule should shape the size of any consumer proposal loans you take.
The danger is concentrated in payday rollovers. Repaying $345 from one cheque leaves a hole that the next $300 loan fills, and within three cycles a borrower who could afford the trustee payment cannot. If you find yourself renewing, our guide to payday loan rollover rules explains the extended payment plans several provinces require lenders to offer, and the homepage section on getting out of the cycle gives the steps that work.
Protect the proposal first: keep the trustee payment on an automatic withdrawal the day after payday, size any loan payment to fit inside what is left, and if income drops, call the trustee about amending the proposal before you call a lender.
Your trustee can sometimes revive a deemed annulled proposal, but only within a short window and on conditions the creditors accept, so treat annulment as a cliff rather than a warning. The cheapest insurance is a loan payment small enough that even a bad month leaves the trustee payment untouched.
When Should You Not Borrow During a Consumer Proposal?
Do not take consumer proposal loans when the loan would fund the proposal payment itself, cover a shortfall that repeats every month, or replace income that has stopped. In each case the honest fix is a conversation with your trustee, not a lender.
- To make the trustee payment. A proposal can often be amended to lower payments or extend the term; borrowing at 35% APR to pay an interest-free arrangement is backwards.
- To cover recurring bills. A loan that covers groceries this month leaves a bigger gap next month. That is a budget problem the counselling sessions built into every proposal are designed to fix.
- After a job loss. Lenders approve on current employment income, so an application usually fails anyway, and a decline plus a hard inquiry helps nobody. Our guide on a loan denied explains what to fix first.
- To pay a fee for a promised loan. Advance fee scams target proposal borrowers because they know the banks have said no. No licensed lender charges before funding.
Two free options are worth one conversation before any application. Some employers advance earned wages at no cost, and every province that regulates payday lending requires lenders to offer an extended payment plan after repeat loans, which turns a two-week balance into smaller scheduled payments without a new loan. The homepage lists the other alternatives to a payday loan.
Borrowing is reasonable for a one-time cost that protects your income, such as the car repair that gets you to work, when the payment fits your budget with the trustee payment intact. That is the case where consumer proposal loans earn their cost.
Compare consumer proposal loans on your incomeConsumer Proposal Loans FAQ
Are guaranteed consumer proposal loans real?
No. No licensed Canadian lender offers guaranteed approval, and the phrase aimed at proposal borrowers usually marks a fee scam. Income-based lenders approve a high share of applicants with steady deposits, which is the realistic version.
Will a new loan show up in my proposal?
No. The proposal covers only the debts that existed on the filing date. A loan taken afterward is separate, is not reduced by the proposal, and must be repaid in full on the lender's terms.
Can I get consumer proposal loans without a credit check?
Many payday lenders and some installment lenders verify income through instant bank verification instead of a hard pull, and any check they run is usually a soft one that does not affect your score. Every legitimate lender still confirms ability to repay.
How much can I borrow while in a proposal?
Usually $100 to $1500 as a payday loan and $500 to $5000 as a first installment loan, with larger amounts depending on the room left after your proposal payment. First loans tend to be smaller and grow after one is repaid on time.
Does borrowing during a proposal hurt my credit rebuild?
Not if the lender reports and you pay on time; an installment loan reporting 12 months of on-time payments beside the R7s is one of the few ways to build positive history during the proposal. A missed payment does the opposite, so borrow only what the budget clears.
What happens to the loan if my proposal is annulled?
Nothing changes for the loan; you still owe it in full. What changes is everything else, because annulment revives the original debts with interest and collection rights, which is why the proposal payment must always come first.
Can I get a loan after the proposal is completed?
Yes, and the pool of lenders widens quickly. The proposal drops off your reports 3 years after completion or 6 years after filing, whichever comes first, and a completed proposal with new on-time accounts is read far more kindly than an active one.