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Zuto is a credit broker, not a lender. Our rates start from 8.9% APR. The rate you are offered will depend on your individual circumstances. Representative Example: Borrowing £9,000 over 60 months with a representative APR of 20.9% the amount payable would be £234 a month, with a total cost of credit of £5,047 and a total amount payable of £14,047.

Zuto Limited. Registered in England under number 05722976. Registered office: Winterton House, Winterton Way, Macclesfield, Cheshire SK11 0LP. Zuto Limited is acting as a broker and not as a lender. Authorised and regulated by the Financial Conduct Authority, registration number 452589. Zuto can introduce you to a limited number of finance providers, based on your credit rating, Zuto won't charge you anything for this service, but do get a fee from the lender which varies based on the product or amount borrowed.

Can I get car finance if I have an IVA?

IVAs are the currently the UK’s most common insolvency procedure – so if you’ve got one in place to help you get back in control of your finance, it’s useful to know whether or not you can get car finance.

What is an IVA?

An IVA is a type of debt solution available for people who are considered ‘insolvent’. If you are financially insolvent, you are legally considered to be unable to make the payments that your creditors are demanding.

Usually, an IVA is available for people who owe at least £6,000 in unsecured debt. An Insolvency Practitioner is required to put an IVA into place for an individual – and, when they do, they will negotiate with each company you owe money to. Rather than payments to each individual creditor, you will instead make payments to the Insolvency Practitioner, who will manage repaying all of your debts – usually over a 5-6 year period. 

When the IVA term is up, remaining debt is written off, and you can begin rebuilding your credit rating.

Will you know if you have an IVA?

Unlike arrears, County Court Judgements, and other debt-related issues, you will always know if you have an IVA – as the process of setting one up is lengthy and requires a lot of interactions with the Insolvency Practitioner’s firm working on your behalf. 

When you have an IVA, there are strict rules around seeking finance or other products that will add to your monthly outgoings. Your Insolvency Practitioner will have made these very clear when your IVA began.

Will I lose my car if I have to get an IVA?

If you already have car finance and you’re seeking an IVA, there’s no definite answer as to whether or not you’ll be able to keep your car.

Your insolvency practitioner will be able to answer your questions with all your unique circumstances taken into consideration. Chances are, they’re going ask questions about how you’ve bought your car, and what kind of car it is.

Question 1: What kind of finance product have you used?

There are a broad range of finance products available for people looking to buy a car. Perhaps the simplest to deal with when you’re exploring getting an IVA is a personal loan. 

With a personal loan, the debt is not secured against the car. As such, you own the car – but the debt will be rolled into the overall payment that your Insolvency Practitioner arranges. While this might sound positive, the Insolvency Practitioner has a duty to your creditors to try to recoup as much money as possible – and as such, they might suggest that you sell your car, buy a cheaper one, and put any difference you have left towards your debts.

On the other hand, your finance product might be secured against the car. This is commonly the case if you have a Personal Contract Purchase (PCP) plan, Hire Purchase (HP), or a personal contract lease (PCL) plan. This type of ‘secured’ credit cannot be included in an IVA, so you may be able to continue making your payments and keep the car. 

With a secured car finance product, you may find that some lenders have a clause that allows them to terminate the finance deal if you seek an IVA. On the other hand, some lenders are more than happy for you to continue as long as there are no issues with payments. If you’re not sure or you can’t see any details about what happens if you get an IVA, speaking your finance company and your Insolvency Practitioner will be helpful. 

Question 2: What kind of car do you have and what’s the monthly cost?

Whichever type of car finance you have, there’s a chance you might have to sell it and downgrade.

As we’ve already mentioned, your Insolvency Practitioner is aiming to find a best-case plan for you and for your creditors – but that might be difficult if you’ve only got limited funds to repay them with because you’re driving a luxury sportscar with enormous running costs. 

Your creditors will be required to deal with IVA applications virtually every day – and they are very unlikely to be unreasonable about them. Ultimately, the people you owe money to are likely to get more back if you’ve got transport that allows you to get to work – so keeping a modest car with a modest monthly payment is likely to be absolutely fine. 

How to get car finance while on an IVA

So, what happens if you’ve got an IVA in place at the moment and you’d like to finance a car?

Generally, an Insolvency Practitioner will require that you ask permission if you’re hoping to obtain credit of more than £500. If you don’t, you could be breaching the terms of your agreement – which can lead to the IVA failing and your creditors expecting all the money they’re owed back. 

When you speak to your Insolvency firm, they’ll assess your request based on how your IVA has been handled so far. If you’ve stuck to your part of the agreement and the monthly payment is reasonable based on your needs, they’re likely to say yes.

It’s worth remembering that an IVA has a significant impact on your credit rating, so even if your Insolvency Practitioner says that a car finance package is allowed, you may decide to explore specialist finance providers – especially those who offer finance to people with a bad credit history.

Other related FAQs

Looking for more related content to this? We’ve picked a selection of related topics that you may find helpful

The best way to get car finance with a poor credit rating is to take steps to rebuild your credit history, such as ensuring you’re on the electoral register, making payments on time and using ‘rebuilder’ credit cards.

Your access to agreements may be more limited, but it is possible to get car finance with a poor credit history.

If you’re refused car finance, find out why. You may need to correct inaccuracies in your credit report or take steps to improve your credit score. You might also want to consider using a guarantor.

In order to get car finance with a CCJ, you will need to change the status of your judgement on the record or have it removed.

In the short term, applying for a car loan can lower your credit score. However, over time if you make your repayments ontime, it can help you to build your score.

There is no specific minimum credit score needed to finance a car. While your credit score is one factor – lenders will consider a number of different pieces of information; including affordability and the type of vehicle you’re buying.

If you apply for car finance shortly before applying for a mortgage, this can affect your mortgage price. However, if you have a mortgage in place already, it will have no impact.

It is not possible to get car finance in the 12 months after being declared bankrupt or until your bankruptcy is discharged through the courts. Getting finance without declaring that your bankrupt is against the law – and could lead to an extension of your bankruptcy.

Both Equifax and Experian are credit referencing agencies. They use slightly different scales to present your credit rating – but both can provide lenders with some of the information they need to decide whether they’re willing to provide you with car finance.

If you make numerous applications for car finance, repeated credit checks can impact your score negatively. Your approach to paying back the loan will decide longer-term credit score effects – but if you pay on time, it could well go up.