If you’re in an Individual Voluntary Arrangement (IVA) or thinking about starting one, you might be wondering whether you can still get a car on finance. For many people, a car isn’t a luxury, it’s essential for getting to work, taking children to school, or running a business.
There are rules in an IVA about borrowing, and you’ll need to think carefully before taking on any new finance.
This guide explains how car finance works during an IVA, what your options are, and what you should consider before making a decision.
Why Are There Restrictions on Borrowing in an IVA?
An IVA is based on you committing to a structured repayment plan. Because of that:
- You’re usually not allowed to take out new credit over £500 without permission
- This rule exists to stop you getting into further financial difficulty
- It also protects your creditors and the integrity of the IVA
Any new borrowing must be genuinely necessary and affordable.
Can You Get Car Finance While in an IVA?
In theory, yes, but in practice it can be difficult.
You will usually need:
- Permission from your insolvency practitioner
- To show that the car is essential, not just convenient
- To prove that the repayments are affordable within your budget
Even with permission, many mainstream lenders will not offer finance to someone who is currently in an IVA, because it appears on your credit file.
When Might Car Finance Be Considered Acceptable?
Car finance is more likely to be approved if:
- Your current car has broken down or is no longer roadworthy
- You need a car for work, health reasons, or essential family commitments
- There is no realistic public transport alternative
- The cost is reasonable and proportionate
Your insolvency practitioner’s main concern will be whether the new payment could put your IVA at risk.
What About Buying a Cheap Car Instead?
In many cases, the simplest and safest option is to:
- Buy a cheaper second-hand car
- Use savings, family help, or sell your existing car
- Avoid taking on new finance during the IVA
This avoids:
- Risk to your IVA
- The need for permission
- High interest rates
- Extra financial pressure
What If You Already Have Car Finance?
If you already had car finance before starting your IVA:
- It may be included in the IVA if it’s unaffordable
- Or it may be left outside the IVA if you need the car and can afford the payments
This is assessed on a case-by-case basis.
Will Lenders Offer Car Finance During an IVA?
Some specialist lenders may be willing to consider applications, but:
- Interest rates are usually very high
- The deals are often poor value
- Approval is not guaranteed
You should be very cautious about any company advertising “guaranteed car finance” to people in IVAs.
What Happens If You Take Finance Without Permission?
This is very important.
If you:
- Take out credit without telling your insolvency practitioner
- Or break the terms of your IVA
Your IVA could:
- Be breached
- Be put at risk of failing
- Lose its legal protection
Always get permission first.
What Happens After Your IVA Ends?
Once your IVA is completed:
- You no longer need permission to borrow
- Your credit file will still show the IVA until the six-year point
- You may still find credit expensive or limited at first
Over time, as your credit record improves, your options should get better.
Is It Ever a Good Idea to Get Car Finance in an IVA?
Sometimes, yes , but only if:
- It’s genuinely essential
- There’s no cheaper alternative
- The cost is low and affordable
- Your IVA provider agrees
In most cases, it’s better to avoid new borrowing during an IVA if you possibly can.
Getting a car on finance during an IVA is possible in some situations, but it should always be approached with caution. The priority is protecting your IVA and your long-term financial recovery.
If you need a car, it’s usually better to look for the cheapest, simplest solution rather than taking on new credit.
What should I do now?
If you’re in an IVA or thinking about starting one and need advice about car finance or any other borrowing, My Debt Plan can help you understand your options and avoid costly mistakes.
You can get debt help online or speak to our friendly team for a confidential, no-obligation conversation. Call us today on 0161 464 0870 and start taking back control of your finances.
