Can you get car finance with a Debt Relief Order(DRO)?

Roman Danaev

14 February 2023

Curious about getting car finance with a Debt Relief Order (DRO)? If you're dealing with a current or past DRO, you might be wondering how it affects your ability to get car finance. This article breaks it down, covering whether having or previously having a DRO impacts your chances of getting car finance and shares important things to know before you apply.

What is a Debt Relief Order (DRO)?

A Debt Relief Order (DRO) is a financial lifeline for those struggling to repay debts. It stops creditors from chasing payments, and after 12 months, if things haven't changed, debts get written off. To qualify, your debts must be under £20,000, no assets over £1,000, and less than £50 monthly after bills. An official receiver authorises it, and a debt adviser's guidance is crucial.

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Consider Sarah, with £18,000 debt, no significant assets, and £40 left monthly. She consults an adviser, meets criteria, applies, and the official receiver approves – a 12-month protection from debt collection begins. The goal: a debt-free fresh start.

Applying for a DRO involves an approved intermediary, like a debt adviser, who checks eligibility and sends the application to an official receiver. Meeting specific criteria is essential – debts under £30,000, no homeownership, living in England or Wales, less than £75 monthly to spend after bills, possessions under £2,000, and no recent DRO.

Does a Debt Relief Order affect your credit score?

A Debt Relief Order (DRO) can have a lasting impact on your credit score. Once issued, it typically remains on your credit report for up to six years. This can make obtaining credit challenging during this period, as lenders often view a DRO as a history of struggling with debt.

However, the impact lessens over time, especially if you manage your finances responsibly. As the years pass since the DRO, and if you demonstrate consistent financial responsibility, your creditworthiness gradually improves. Lenders may be more willing to extend credit to individuals with a DRO in their past, provided they've shown a positive financial track record. While a DRO may initially hinder your credit opportunities, responsible financial management post-DRO can contribute to rebuilding your credit over time. At Carplus, we understand the challenges you may face. We offer tailored bad credit car finance solutions, helping you move forward on the road to financial recovery.

Can you get car finance with a DRO?

Getting car finance with a Debt Relief Order (DRO) is tough in the first year. You need permission to borrow over £500 and have to tell lenders about your DRO. Low disposable income makes regular payments difficult.

After a year, your credit score still bears the DRO impact. At Carplus, we get it. Traditional lenders might hesitate, but we have solutions. You could get car finance with a bigger deposit and adjusted interest rates. We tailor things to your situation, making it possible to own a vehicle even after facing financial challenges. Our goal is to help you move forward on the road, no matter what financial difficulties you've had.

Can you own a car while in a Debt Relief Order?

Owning a car during a Debt Relief Order (DRO) varies. Ask your DRO advisor for clarity. DRO applications may get declined if assets exceed £2,000—cash, savings, and belongings.Citizens Advice notes a car under £2,000 isn't counted, except for business use or disability adaptations.

Conditional Sale (CS) finance cars may not be assets since you don't own it until the final payment. However, making repayments during an active DRO might have limits. Check finance agreements; some allow automatic termination and repossession with a DRO. For Carplus customers facing financial issues, seek support by reaching out. Always consult for tailored advice based on your situation.

Increase your chances of approval by choosing an affordable car

Increase your chances of approval by picking a car on finance you can afford . Stick to your budget to up your chances of getting car finance. Missing payments can cause problems, so go for a vehicle that fits your budget. Choose wisely to make sure you can manage the repayments without any issues. At Carplus, we're here to help you get the car you need without breaking the bank.

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