IVA Car Finance – Complete Guide with FAQs, Tips & More

iva car finance

An Individual Voluntary Arrangement (IVA) is a debt solution that thousands of Brits opt for every year.

It ensures you’re not paying any more than you can afford and by the end of its duration, you’re entirely debt-free.

However, there are certain conditions and setbacks that come when you enter into an IVA which you need to consider.

One of the things many people think about before entering into an IVA is whether they’ll be able to get a car on finance. 

An IVA certainly hurts your chances to be able to secure credit reliably. However, it’s not impossible to find packages that can suit your needs. 

What is an Individual Voluntary Arrangement (IVA)? 

An IVA is a debt solution that comes into place through an agreement between you and your creditors. The agreement states that you will pay off your debt to them in the form of monthly payments over the course of a certain duration (typically five years). 

At the end of this duration, if a certain portion of your debt still remains to be paid, it will simply be written off. 

An IVA is normally handled by an insolvency practitioner who basically acts as the mediator between you and your creditors. He or she also works with you to analyse your financial situation and credit history in order to formulate a proposal for your creditors.

While an IVA is great as a debt solution, it can definitely cause you to have a bad credit score. An IVA stays in your credit file for six years after the start of the IVA. 

Is it Possible for Me to Get Car Finance With an IVA? 

When your IVA is in place, according to rules authorised and regulated by the Financial Conduct Authority, you will need to ask permission from your Insolvency Practitioner to secure credit of more than £500. 

If you do not seek their permission before looking for a car finance loan, this would be in direct breach of IVA guidelines and could cause your IVA to fail.

Whether or not your IP grants you permission depends entirely on your particular situation. If they feel that you will be able to manage monthly payments to both your IVA as well as your car finance loan, they will grant you permission to seek one. 

However, if they feel that paying monthly towards your car finance loan as well as your IVA would be tough for you, they won’t give you permission. 

It’s normally difficult to get permission for securing credit higher than £500 during an IVA because most of your disposable income goes towards your monthly IVA payments. 

You can have a higher chance of securing a car finance loan if you can convince your IP that the car is a necessity. For example, if you need it to commute to work, etc. 

Once you do get their permission, your next hurdle will be actually finding and securing car finance. This is because, according to rules authorised and regulated by the Financial Conduct Authority, your IVA needs to be mentioned in your credit file

It’ll show lenders that you’ve had trouble managing credit in the past and they may not be enthusiastic about giving you a car finance loan. 

car finance on iva

What are My Options? 

There are companies out there that specialise in giving loans to people with poor credit scores. However, you must be cautious when considering this option as getting a loan with a poor credit history can be very expensive. 

It’s important to really consider whether you really need to get car finance. I definitely suggest opting for it if you need it for your work. However, if you can manage without a car, such as by using public transport, I suggest you do that until you can save up some money to buy a car outright. 

Buying a used car is also something you can consider. A car finance company may not necessarily have the best loan for people with bad credit scores. 

You can also opt to approach a credit union who could help you access a loan you wouldn’t otherwise be able to get. 

What Do Finance Options Normally Look Like? 

Hire Purchase (HP) 

A hire purchase is the most common way in which most people finance their car. It involves you making monthly payments towards your car with interest over a certain period of time. At the end of the finance agreement, you will have completely paid off the price of the car and it would be yours outright. 

Personal Contract Purchase (PCP) 

A Personal Contract Purchase normally requires you to make an initial deposit for the car finance.

This differs from a Hire Purchase in that the payments you make monthly towards your car are typically quite lower.

However, at the end of the finance agreement, you have to make one large, final payment in order to secure the car and own it outright. This payment is typically referred to as a balloon payment. 

When you reach the end of this finance agreement, you have three options: Purchase the car by making the final balloon payment, give the car back or partly exchange it for a different car. 

Whether you go for a Hire Purchase or a Personal Contract Purchase depends entirely on your unique financial situation. 

I highly suggest that you discuss this with your IP with your debt in mind so that you can choose the option that is best for you. 

Is it Possible for Me to get Car Finance After an IVA? 

It definitely gets easier to secure car finance after your IVA has ended. 

Your name is typically removed from the Insolvency Register about three to four months after your IVA ends. However, the mention of the IVA stays in your credit file a bit longer. This is typically a year after the IVA ends for most people.

Most IVAs last five years and the mention of the IVA stays in your credit file for six years after your IVA starts. As you can probably imagine, this still does have a negative impact on your credit score and you may still have difficulty securing a car finance loan for yourself. 

If you’re not in immediate need of a car, I suggest that you improve and build up your credit score first before applying for a car finance loan. 

However, if you’re desperate for a car, then you’re going to have to find a lender that’s willing to give you a car finance loan despite your poor credit score. 

If you’ve been punctual with your IVA payments, you can use this to your advantage. Give the lender proof about how effectively you were able to pay off your debt. Ensure them that you’ll stick to the same conduct with their loan as well. 

You can also opt to approach a credit union. They will help you find companies or help you get accepted for a loan that you may not have been able to secure on your own.


Just like any other form of credit during an IVA, a car finance loan is definitely extremely hard to get accepted for. While it definitely is hard, it’s certainly not impossible.

If you have a legitimate reason to have a car, this can increase your chances of securing a car finance loan tenfold. There are several companies specialising in giving loans to individuals with IVAs and with the right approach, you can definitely secure one for yourself.


Do you know your debt free date?
Do you know your
debt free date?
  • Affordable repayments with an end date in sight
  • Reduce pressure from people you owe money to
  • Stop interest and charges from soaring