An Individual Voluntary Arrangement (IVA) is a formal agreement between you and your creditors, usually facilitated by an insolvency practitioner. If you are considering an IVA, it is designed to help individuals in financial difficulty manage their debts and work towards becoming debt free. When you enter into an IVA, you agree to make affordable monthly payments, and in return, your creditors agree to freeze interest and charges, as well as write off a portion of your debt at the end of the IVA agreement.
Yes, you can still get car finance with an IVA, though your credit rating will affect the terms you are offered and you should expect higher interest rates than with a standard car finance agreement. Most agreements require you to get permission from your IVA supervisor before taking on any new credit above £500, skipping this step could put your IVA at risk.
Because an IVA stays on your credit file for six years, mainstream car finance lenders will see you as higher risk, meaning stricter terms and shorter repayment periods. An IVA might affect your ability to get a car finance deal with high street lenders, but it does not make it impossible. HP car finance is the most commonly available type of car finance for IVA applicants. PCP is less likely due to the balloon payment structure lenders consider too high a risk.
We, at Carplus, work with applicants with poor credit or an active IVA and can often offer car finance where mainstream lenders cannot. Your rate will depend on your credit score, how far into your IVA you are, and the lender's criteria. When you apply through Carplus, we run a soft search first, which does not affect your credit score, so you can check your eligibility before committing to a full finance application.
These estimates are subject to credit checks and may change when you apply for finance. this is for example purposes only
Maximum borrowable amount
Rates from 9.9% APR: the exact rate you will be offered will be based on your circumstances, subject to status. Representative Hire purchase (HP) example: borrowing £7,000 over 5 years with a representative APR of 21.9%, the annual interest rate of 21.9% (Fixed) and a deposit of £0, the amount payable would be £185.33 per month, with a total cost of credit of £4,119.81 and a total amount payable of £11,119.81. We look to find the best rate from our panel of lenders and will offer you the best deal that you're eligible for. We receive a fixed fee commission per finance agreement, or we receive a commission based on a percentage of the total amount of finance taken. This will not affect the interest rate offered or the total amount repayable. Our service is free.
There is no set time you have to wait before applying for car finance after your IVA. You can apply as soon as your IVA is complete, though waiting until the IVA has been removed from the Individual Insolvency Register will typically improve your chances of getting car finance and give you access to better rates and a wider choice of lenders.
The IVA will stay on your credit report for 6 years from the date of the default, meaning lenders can still see it during that period even after your final payment. During this time, you can start rebuilding your credit score by making regular payments on bills, staying within your credit limit, and avoiding further missed payments. The stronger your credit profile when you apply, the better your chances of securing a competitive car finance deal.
Getting car finance whilst in an IVA is straightforward if you follow the right steps.
First, you need to get permission from your insolvency practitioner before you looking to apply for car finance. They will review your income, expenses, and existing debt to confirm you can afford the car payments. Taking on new credit above £500 without this approval is a breach of the terms of your IVA agreement.
If you are putting down a deposit, make sure the funds can be clearly accounted for. Using money that should be going towards your IVA payments could put your agreement at risk.
Once you have approval, apply for finance through a specialist broker like Carplus. We work with car finance lenders who consider applicants with an IVA on their credit file and run a soft search first, so checking your eligibility will not affect your credit score.
HP car finance is the most realistic type of car finance available during an active IVA. You pay a fixed monthly amount over an agreed term, typically between one and five years, and own the car outright once the final payment is made. Because HP does not include a balloon payment, lenders consider it lower risk than PCP, making it easier to get HP car finance with an IVA on your credit file. The total cost of the car is spread across the agreement, with no large payment due at the end.
PCP car finance is unlikely to be available during an active IVA. PCP car finance providers consider the large balloon payment at the end of the term too high a risk for applicants with an IVA on their credit file. While monthly payments are lower than HP, it is the deferred balloon payment that makes lender approval difficult. Once your IVA is complete and your credit score has recovered, PCP becomes a more realistic option — giving you the flexibility to purchase a new car, return it, or use any equity towards getting a new car at the end of the agreement.
Yes, you can apply for car finance after your IVA, though your ability to get approved for car finance will depend on how much your credit score has recovered. While the IVA is showing on your report, mainstream finance providers may still decline your application or offer less favourable terms. Once the IVA has been removed from your credit file after six years, you will have access to a much wider range of bad credit car finance solutions and standard products.
Compare and find the best car finance deals quickly and easily even with bad or poor credit. When comparing deals, you can also factor in the part-exchange value of your current car to reduce the overall cost.
Getting a finance quote with Carplus won't affect your credit score, but a hard search will be completed before completion of the deal
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Yes, you can usually keep your car during an IVA, provided it is necessary for work or family transport and its value does not exceed £5,000. If your car is worth more than £5,000, your insolvency practitioner may require you to sell it and replace it with a cheaper alternative. If your car is on finance, the monthly car payments will be factored into your IVA budget.
Yes, because an IVA is recorded on your credit file, mainstream finance providers may decline your finance application or offer less favourable terms. A poor credit history combined with an active IVA makes it harder to get car finance through standard lenders.
Yes, both options are available to IVA applicants. With joint finance, a co-applicant with a strong credit score can improve your chances of approval. With guarantor car finance, someone with a good credit record agrees to guarantee car finance repayments if you cannot meet them — though missed payments will affect their credit file as well as yours.
This depends on the value of your car and how it was purchased. Your insolvency practitioner will assess whether you can afford the car on your current budget and may suggest keeping your existing finance agreement or trading in for a cheaper vehicle and using the difference to contribute towards your IVA.
