Financial agreements can be complicated, particularly for one with an Individual Voluntary Arrangement. One question often arises: can you get car finance with an IVA? This article discusses the procedure of obtaining car finance.
Although an IVA serves as a well-managed debt program, some restrictions might limit one’s ability to seek new credit lines, such as car finance. This article will consider the numerous obstacles and opportunities faced by people in an IVA and give surefire tips on addressing these difficulties and which criteria lenders examine when assessing the application.
What Is IVA?
It’s like a deal you make with the people you owe money to in the UK. You agree to pay them all back bit by bit over time, so you don’t have to declare bankruptcy. It’s for people struggling with money but want to find a way to pay their debts in a shorter period.
Here’s how it works: you get help from a particular financial expert to make a plan showing how to pay the money back. The plan is made up of monthly partial payments for about five years. But before you start, most of the people you owe – provided they are the majority – have to agree with your plan.
Once that is set, the deal is on. If you do everything you are supposed to do according to the plan and make all the payments on time, the people you owe money to cannot take you to court, and they can’t because they want all the money back at once. Sometimes, they might even forgive a part of it.
Anyway, after five years, if you follow the plan, they cancel all the money you still owe, and you get a new clean slate from which to start. Just remember that your credit score might suffer, and there might be some costs.
Navigating Car Finance with an IVA
Can you get car finance with an IVA? Following are the features of car finance with IVA:
Honesty is the Best Policy
When seeking car finance, honesty about your IVA is critical. Failing to disclose to a finance company that you are under an IVA can have even more disastrous financial consequences later. Instead, be honest about your position, and it may be easier to find a creditor who is more understanding of your circumstances.
High-Interest Rates
Be ready to encounter higher interest rates. Creditors compensate for the gamble of loaning money to somebody under an IVA by charging them a higher interest rate. This makes credit more expensive, but you can still obtain car financing.
Specialist Lenders
Some finance companies and creditors specialize in busting loans to people with low credit histories, including those currently in IVAs. These creditors are familiar with IVAs and offer loans that are more suitable for them. Research companies like these before committing to their terms, as some may not be as terrific as they sound.
A Guarantor Can Help
A guarantee will significantly raise your chances of obtaining automobile financing. A guarantor is an individual who assumes responsibility for repaying your money if you are unable to do so. This protects the creditor by reducing risk and increasing your probability of debt approval. However, ensure you understand your guarantee’s position in financing, as any late or non-payment could also affect their finances.
Save for a Larger Deposit
One of the most direct methods is to supply a more significant cash deposit. A larger deposit will lower the loan sum and lessen the creditor’s risk. Save as much money as possible. This also increases the possibility of receiving car financing in the first place, as your funds need to suggest that you can afford to make regular repayments.
Applying for Car Finance During an IVA
Can you get car finance with an IVA? Yes, following are the steps to apply for car finance during an IVA:
- Getting the Green Light from Your Insolvency Practitioner: Consult the insolvency practitioner before applying for car finance. They can tell you how it will affect your IVA and the sum you can realistically afford.
- Navigating Through Specialist Lenders: Look for specialist offers for bad credit holders with less strict criteria and a clearer understanding of your position.
- Opting for Smaller Loans: Narrow your search because of limited choices and search for car finance, which can provide you with a more budgeted-used car instead of a new one.
- Increasing Your Deposit to Reduce Borrowing: The larger your down payment, the less you will borrow. Demonstrating financial responsibility to the lender increases your chances of getting approved for a loan.
Applying for Car Finance After an IVA
When the program is completed, applying for car finance after an IVA certification can be simple. However, there might be a few key considerations to consider to enhance your possibilities of being accepted:
- Credit Score Increase: Your credit score will have increased since you filed your IVA. However, it may still need improvement. You may be offered slightly higher car financing interest rates than those with tarnished borrowing records.
- Certificate as Evidence: Ensure that your lender receives a copy of your IVA certificate showing that you have discharged your obligations. This will assure them they can trust you with more significant debts.
- Budgeting: Prepare suitable funds for your car finance payment to ensure no other outstanding bills will disrupt your cost of living.
Tips for Securing Car Finance After an IVA
- Shop Around: Compare your options, and don’t settle for the first option you find. Get multiple quotes to negotiate better interest rates and terms.
- Be Honest: Make sure the lenders are aware of your IVA history. Discuss how you decided to file for an IVA and how you have managed your finances since then.
- Measure Your Affordability: Don’t purchase new cars with features you don’t need. Ensure the vehicle you choose fits your price range and won’t break the bank.
Conclusion
“Can you get car finance with an IVA?” The answer is yes, but it is necessary to remember that there are risks in this case, and several nuances must be considered. If you want to restore your financial reputation and get a car, you can do it, but it is impossible to do it wrongfully and negligently. Therefore, this question depends on how careful you are and what you know about the acquisition conditions.