Can you get car finance with an IVA?

Credit Advice

If you currently have an active IVA, securing car finance can be more difficult, but not impossible.

IVA Car Finance: Can You Get Car Finance with an IVA?

What is an IVA?

An Individual Voluntary Arrangement (IVA) is a legally binding agreement between you and your creditors to repay your debts at an affordable rate. Depending on your financial situation, you may either make a lump sum IVA payment or spread repayments over five to six years.

The primary aim of an IVA is to help you write off unaffordable debt while providing an opportunity to rebuild your credit score over time.

Is an IVA the Same as Bankruptcy?

While both an IVA and bankruptcy are forms of debt solutions, they work differently:

  • IVA: You agree to repay a portion of your debt over time while retaining control of your assets.

  • Bankruptcy: You relinquish control over your assets, and depending on your agreement, some debts may be written off entirely.

  • Duration: Bankruptcy typically lasts 12 months, while an IVA can last 5 to 6 years.

Both affect your credit rating and impact your ability to secure car finance in the future.

Can You Get Car Finance with an IVA?

If you currently have an active IVA, securing car finance can be more difficult, but not impossible. Lenders assess applications based on credit history, and an IVA signals previous financial difficulties.

However, some specialist lenders offer IVA car finance, particularly if:

  • You have permission from your insolvency practitioner (IP).

  • You can prove affordability and make repayments on time.

  • You find lenders who specialise in bad credit finance.

Making on-time payments on a car finance agreement can help rebuild your credit score, making future borrowing easier.

How to Improve Your Chances of Getting Car Finance with an IVA

If you're applying for car finance while in an IVA, here are some steps to increase your approval chances:

  • Get approval from your insolvency practitioner before applying.

  • Save for a deposit to reduce the total loan amount.

  • Opt for a budget-friendly car to lower monthly payments.

  • Choose lenders that offer IVA-friendly car finance.

  • Ensure affordability – lenders assess your income vs. expenses.

Getting Car Finance After an IVA

Once your IVA is completed, it remains on your credit file for six years from the start date. While this affects your ability to get finance, securing a car finance agreement becomes much easier after your IVA is fully repaid.

Benefits of Car Finance After an IVA

  • Helps rebuild your credit score when payments are made on time.

  • Allows you to spread the cost of a car into affordable payments.

  • Provides access to better job opportunities, increasing income potential.

While waiting six years for your credit score to improve isn’t ideal, car finance options still exist to help you get on the road sooner.

Find the Right Car Finance Deal for You

If you're looking for IVA-friendly car finance, use the Match Me Car Finance Calculator to explore lenders and vehicles that fit your budget. It won’t affect your credit score, ensuring a risk-free way to find the perfect car finance deal.

Get Started Today

Start your journey towards owning a car with an IVA by exploring finance options that work for you. With the right approach, you can find an affordable and manageable way to finance a new or used vehicle, even if you’ve had financial challenges in the past.

Related Questions

What proof of income do I need to provide for car finance?

Most lenders will require you to provide proof of income, usually from a recent payslip or bank statement. If you are self-employed they may also ask for a tax return.

What are the basic eligibility criteria for car finance in the UK?

Most lenders will consider someone eligible if they're over 18 years old, a UK resident with 3 years address history and 12 months employment history. They must usually hold a full UK driving licence.

Is there a minimum income requirement for car finance?

Yes, most lenders impose a minimum income requirement for car finance to ensure applicants can afford the monthly repayments, usually between £1000 to £1500 per month after tax.