Can I Get Car Finance with an IVA?

If you have entered into an IVA, you may find it difficult to be approved for car finance, however, it’s not impossible. In this guide, we look into what your options are for getting car finance with an IVA and how the IVA can affect your application.

What is an IVA?

An IVA is an Individual Voluntary Arrangement. It’s a legally binding arrangement between yourself and your creditors to pay back your debts. You may enter into this type of agreement if you are struggling to repay debts and want to avoid bankruptcy.

An IVA will be arranged by a court as a way of helping you to pay back your debts by making regular payments that you can afford over a set period of time, usually longer than your original debt repayment was set for.

As your creditors will also agree to the IVA, so they won’t chase you for payments during the IVA period. Interest is typically frozen while you have your IVA, so all your payments just go towards clearing the debt itself.

Can I get car finance after an IVA?

Yes, you can still get car finance while you’re in an IVA, but you may find it more difficult. This is because the IVA shows on your credit report and labels you as higher risk when it comes to debt repayments.

However, that doesn’t make it impossible to get car finance with an IVA. There are many lenders that offer bad credit car finance, that can be appropriate for those with an IVA. At GetCarFinanceHere, our team will find the best car finance deals that suit your specific circumstances, finding car finance that’s affordable for you, even if you have poor credit rating.

How can I get car finance with an IVA?

If you have assessed your finances and know you are able to make the repayments alongside your IVA payments, you can apply for car finance. Before you’re approved by the lender, you will also need approval from your insolvency practitioner. Because your IVA is legally binding, your car finance lender, and any other credit lender lending over £500, will require authorisation from your insolvency practitioner before they will be able to approve your finance.

Depending on your specific situation, your insolvency practitioner may not give approval for you to borrow more money. They may advise that you focus on repaying your current debts. However, if your financial circumstances have improved and you can comfortably make your previous payments on top of the car finance, they may allow it. You will need to prove to your insolvency practitioner that you can make all your repayments, as well as make the case for why you need to buy a car, for example, if you need one to get to work.

How will an IVA affect my car finance?

An IVA will negatively affect your credit score. This means that you’ll be seen as higher risk by car finance lenders. Because of this, you may find that your car finance offers have higher interest rates – this is done as a way for lenders to protect themselves.

You can help to improve your credit score when applying for car finance by ensuring you make your repayments on time and working to reduce your debt. You can read more in our blog about how to improve you’re your credit score.

You should also note that applying for car finance could affect your credit score. You should ensure that you are only allowing for soft credit checks until you are ready to finalise your car finance. Soft credit checks won’t leave a mark on your credit report, but hard credit checks will – if you have too many hard credit checks in a short space of time, your credit score will be negatively affected. Many car lenders will begin with a soft credit check and then only do a hard credit check once you’re happy to proceed. You should ensure you have approval from your insolvency practitioner before any lenders conduct a hard credit check.

How long does an IVA stay on my credit file?

Once your IVA is finished, you’ll stay on the Individual Insolvency Register for three months. However, the IVA will stay on your credit report for six years from the start date of the agreement. This means that even if you have completed the agreement, you may still find it can affect your ability to apply for car finance. In this case, it’s best to work to improve your credit score to ensure you can access the best possible rates and car finance deals.

What happens to my car if I enter an IVA and I already have car finance?

If you currently have car finance but are entering into an IVA, you likely will be able to keep your car. Your car lender will also have to enter the IVA, so you will continue to make the payments at an amount that is affordable for you.

However, as part of the IVA, it will be assessed whether your car is essential or a luxury. If it is deemed to be a luxury, you will have to give it back to the lender. If it is essential, i.e. you need it to get to work, you will be able to keep it.

GetCarFinanceHere is dedicated to finding you the best car finance deals for your situation. Through our network of lenders, our team will find the best options available for you, even if you have an IVA and poor credit. If you have any questions regarding our car finance deals, get in touch with GetCarFinanceHere. Call us on 0800 042 0204, 01282 544532 or contact us online.