Car Finance Options with an IVA

Getting a car while in an IVA

If you are in an Individual Voluntary Arrangement, replacing or financing a car can feel complicated. An IVA is a formal agreement to repay what you can afford over roughly five to six years. During that time, borrowing more than £500 - including car finance - needs written permission from your insolvency practitioner. The rule exists to stop extra repayments making your IVA unaffordable.

That does not mean you cannot get a car. Mainstream lenders often say no during an IVA, but specialist providers may consider an application if your practitioner agrees, the car is sensibly priced, and the monthly payments fit your budget. Hire Purchase is the most common route, as it is straightforward and gives you ownership once the final instalment and option-to-purchase fee are paid. Payments can be higher than some alternatives, so keeping costs down is key.

Affordability is the heart of every decision. Lenders will review your income, essential outgoings and your IVA payment to ensure the car does not tip your budget over the edge. A modest car, a deposit, and a longer term can help reduce monthly costs - although a longer term usually means paying more interest overall. If you keep up repayments, you can start rebuilding your credit profile, which opens up better options once your IVA finishes.

Rules are similar across England, Wales and Northern Ireland. Scotland uses Protected Trust Deeds, which work in a comparable way. If you are unsure what applies to you, ask your practitioner for clarity before you begin.

The golden rule: get your insolvency practitioner’s written permission before you apply.

Who this guidance is for

This page is for people in England, Wales or Northern Ireland who are currently in an IVA and need a reliable vehicle for work, family or essential travel. It will also help those approaching an IVA who want to understand how car finance might work during the arrangement. If you live in Scotland, similar principles apply under a Protected Trust Deed, but speak to your adviser for specifics.

You will find practical steps, realistic options and clear checks so you can weigh the pros and cons without risking your IVA.

Your realistic finance routes

1. Hire Purchase with a specialist bad credit lender - often the most achievable route during an IVA if your practitioner agrees and you meet affordability checks.

2. Personal Contract Purchase - rarer in an IVA due to balloon risk, but possible with specialist lenders and strong affordability.

3. Keep or refinance an existing car - usually acceptable if payments remain affordable and you stay up to date.

4. Small loan under £500 - only if total borrowing stays below £500 without permission. Over £500 needs practitioner approval.

5. Save a deposit and buy a cheaper used car - lowers the loan amount and monthly cost.

6. Short-term leasing or subscription services - limited availability in an IVA and often higher monthly costs.

Costs, impact and risk at a glance

Can you qualify right now

Lenders and your practitioner will look for a stable picture. You must be at least 18, hold a valid UK driving licence, and have regular income from employment or self-employment. Your practitioner’s written approval is essential for any borrowing above £500. They will assess whether the new payment still leaves room for your IVA contribution and normal household bills.

Prepare documents up front: proof of ID and address, driving licence, recent bank statements and payslips, plus your practitioner’s permission letter. A deposit helps by reducing the loan amount and demonstrating commitment. Expect a detailed affordability check that includes IVA payments, priority bills, and realistic motoring costs like insurance, fuel and maintenance. If the numbers do not work on paper, a reputable lender will decline - and that is a protection, not a setback.

Kandoo can introduce you to UK specialist lenders who consider applicants with IVAs. The aim is simple - ensure the car is essential, the budget stacks up, and the agreement does not jeopardise your IVA.

Step-by-step to apply with confidence

1. Speak to your insolvency practitioner and request written permission.

2. Set a clear budget including insurance, fuel and maintenance.

3. Save a deposit to reduce the amount you need to borrow.

4. Choose a modest, reliable car with low running costs.

5. Gather documents - ID, address, licence, payslips, bank statements.

6. Apply with a specialist IVA-friendly lender or broker.

7. Complete affordability checks and submit your practitioner letter.

8. Review the agreement carefully before you sign anything.

Key upsides and trade-offs

Before you decide - read this first

A car should support your IVA, not strain it. Start by confirming how essential the vehicle is for commuting, caring responsibilities or medical appointments. Then test your budget with realistic running costs and an interest rate that reflects IVA pricing. If the sums only work by cutting into essentials, the answer is not yet. Consider a cheaper car, a bigger deposit, or waiting.

Be transparent with lenders about your IVA. Honesty builds trust and speeds things up. Check your credit report for accuracy and correct any errors before applying. Finally, adopt a simple rule of thumb: if you cannot still make your IVA payment comfortably after adding the car costs, do not apply. Protecting your IVA protects your longer-term financial recovery.

Sensible alternatives to consider

1. Keep your current car and maintain payments on time if affordable.

2. Use public transport, car share or short-term rental for essential trips.

3. Choose a smaller, older vehicle with low insurance and good economy.

4. Increase your deposit by saving for a few months first.

5. Delay new finance until after your IVA completes for better rates.

6. Ask your employer about salary-sacrifice or pooled car schemes.

Frequently asked questions

Q: Can I get car finance during an IVA? A: Yes, but you must have written permission from your insolvency practitioner and pass strict affordability checks with a specialist lender.

Q: Do I need a deposit? A: Not always, but a deposit usually improves approval chances and reduces monthly payments, which helps your affordability case.

Q: Is Hire Purchase allowed in an IVA? A: It can be, provided your practitioner agrees and the payment fits your budget. You own the car after the final instalment and option-to-purchase fee.

Q: Will this help my credit score? A: Paying on time can gradually improve your credit profile. Missed payments will harm it, so only proceed if you are confident you can afford it.

Q: What if I live in Scotland? A: Scotland uses Protected Trust Deeds rather than IVAs. The principles are similar, but you should confirm specific rules with your adviser.

Q: What happens when my IVA finishes? A: Remaining unsecured debts are written off on successful completion. Access to standard car finance usually improves over time as your credit history recovers.

Q: Can I borrow under £500 without permission? A: Borrowing below £500 may be allowed without written consent, but be careful. If total borrowing goes over £500, you will need your practitioner’s approval.

How Kandoo can help

Kandoo is a UK-based retail finance broker that works with a panel of specialist lenders. If a car is essential and you have your practitioner’s permission, we can help you explore IVA-friendly options, compare costs, and keep everything aligned with your budget. We keep it simple, transparent and guided by what you can genuinely afford.

Important information

This guide is general information, not personal advice. Car finance during an IVA is subject to lender criteria and your practitioner’s approval. Always check affordability carefully and read the agreement before signing. If in doubt, speak to your insolvency practitioner or a qualified debt adviser.