An IVA, or Individual Voluntary Arrangement, is a legal method of resolving debt problems. It allows a person to repay a percentage of their unsecured debt back to their creditors in affordable monthly installments over a fixed term, usually around 5 years. Once the IVA successfully completes the remaining debt is written off and you’ll be issued with a certificate of completion. At this point, any balances outstanding on the debts included in your IVA will be written off.
Can I get car finance while in an IVA?
If you do choose to enter into an IVA (Individual Voluntary Arrangement) accessing any kind of credit will be more challenging. However, it is certainly not impossible to find a suitable car finance deal while in an IVA. Specialist lenders will consider this type of applications on a case by case basis. We work with a number of lenders who would be happy to consider an application.
IVAs are a formal type of insolvency – as such they are recorded on a public Insolvency Register. Because of this, an IVA will also appear on your credit file, indicating to lenders that you have had trouble managing credit in the past. This will lower your credit score, and make lenders more cautious when it comes to providing you with credit.
During an IVA, you will need permission from the Insolvency Practitioner (IP) dealing with your case to obtain credit of more than £500, because of this IVA Car Finance lenders will actively seek their written permission.
Your IP will decide whether or not your request for a car loan is reasonable based on your circumstances – namely your income and expenses. If committing to a car finance loan is sustainable given your current budget and living costs, your IP is likely to approve it.
Can I get car finance after an IVA?
Information about your IVA will be removed from the Insolvency Register as soon as it is completed. However, it will remain on your credit file a bit longer – around a year, depending on the length of your IVA. This can drag down your credit score.
Even though you no longer need anyone’s permission to apply for credit, it can still be challenging to find a suitable lender. Again, we work with lenders who would be happy to consider an application when your IVA completes.