Can I Get Car Finance If I Have an IVA?

Here, we get to the bare bones of whether you can get car finance with an IVA and why the news probably isn't as bad as you think. 

What is an IVA and How Does It Work?

An Individual Voluntary Arrangement (IVA) is a formal debt solution that allows you to make manageable monthly payments towards your debts. 

You may have an IVA if your previous debts become unmanageable and you come to an agreement with the creditors. 

Essentially, it's a legal agreement between you and your creditors, usually lasting for five to six years. 

So, how does it work? 

Well, you'll work with an insolvency practitioner, who'll assess your financial situation and help you come up with a payment plan. 

Once that's sorted, the practitioner negotiates with your creditors to get them on board.

An IVA can freeze interest and charges, so your debt won't keep piling up. Plus, creditors can't take legal action against you while the IVA is in place. 

But it's not all sunshine and rainbows, as IVA will impact your credit score and could require you to release equity from assets like your home. 

Still, if you're drowning in debt, it may help you regain financial stability.

Car Finance Options with an IVA

If you find yourself with an IVA but want to get car finance, you're not alone. 

While an IVA can make things trickier, there are ways to get car finance and, ultimately, the new set of wheels. 

Let's break it down with these car finance tips if you have an IVA.

Personal loan

Many lenders will still lend to you even if you've got an IVA. 

They'll take into account the entire picture, including your income. 

You may end up paying a higher interest rate, but having an IVA doesn't mean that you can't secure car finance. 

Hire Purchase (HP)

Hire Purchase is a popular choice for people with an IVA. 

You'll pay a deposit and then make monthly payments. 

At the end of the term, the car is yours. 

However, be prepared for higher interest rates due to the IVA.

Personal Contract Purchase (PCP)

PCP is another option, but it can be difficult to get approved with an IVA. 

You'll make lower monthly payments and have the option to buy the car at the end of the contract with something called a balloon payment. 

Guarantor Loans

If you've got a willing guarantor with good credit, this could be useful when seeking car finance. 

Your guarantor essentially co-signs the loan, providing a safety net for the lender.

If, for any reason, you're unable to make payments, the guarantor steps in and makes them for you. 

Specialist Lenders

Some lenders specialise in car finance for people with IVAs or poor credit. 

The rates might be steep with these lenders, but it's an option worth exploring – especially if it's your last shot at getting car finance.

Finding the Right Car Finance With an IVA

Navigating the world of car finance with an Individual Voluntary Arrangement (IVA) doesn't have to be daunting. 

Take your time and look for the right options. 

At the end of the day, having a car finance agreement with an IVA can even help in the long term with building your credit.

Plus, you get to drive a new car and enjoy all the freedom that brings. 

Read more about Car Finance

Buying a Car With Outstanding Finance

Top Tips for First-Time Car Buyers

What Does Pre-Approved Car Finance Mean?


Can I Get Car Finance while Under an IVA?

Yes, you can, although your options may be more limited and you're likely to face higher interest rates. Approval from your insolvency practitioner is usually required.

Does an IVA affect your credit score?

Yes, an IVA will have a negative impact on your credit score for the duration it's active and usually for a year afterwards.

Will My IVA Affect My Ability to Get Car Finance?

Definitely. An IVA can limit the types of finance you're eligible for and you'll often face higher interest rates. However, some specialist lenders may still consider you.

What Documents Are Required to Apply for Car Finance with an IVA?

You'll need approval from your insolvency practitioner, along with standard documents like proof of income, identification, and possibly proof of address.

Can I Get Guaranteed Car Finance with an IVA?

There are no guarantees, but there are specialist lenders who focus on providing car finance for people with IVAs or poor credit. Expect higher rates and potentially larger deposits.