When you’re struggling with problem debt, taking on more credit is probably the last thing you want, and yet sometimes circumstances demand it. There are around 45 million drivers in the UK, using their vehicles for commuting, family matters, travel, leisure and much more. Cars are an essential part of our lives, but not cheap – so what do we do if we need to get a new vehicle but have an IVA.
An Individual Voluntary Agreement is an agreement arranged by an insolvency practitioner, between someone who owes debt and their creditors. It allows them to pay some or all of their debt via monthly payments, the scale of which must be agreed by at least 75% (in value) of creditors. This arrangement is legally binding, and formulated based upon the person’s financial status including income and outgoings.
An IVA affects your credit rating, and as such might normally lessen your chances of purchasing anything on finance. However, insolvency practitioners (and creditors) recognise that a car is mandatory for many, as without a means of transport many of us will not be able to get to work, and therefore won’t be able to pay our IVA. Therefore, you should be able to find a vehicle that is reliable and practical enough to allow you to live your life and continue to work off the debts.
The probable route is this; let’s assume that you have had an IVA for six months, and need a car. Your first port of call could be your insolvency practitioner, who will assess your current arrangements and see if there is scope for you to apply for finance and perhaps, just as importantly, the amount of money you could realistically spend per month.
Alternatively, you might first contact a car finance company that specialises in those with bad credit and IVAs, to see what is realistic for their circumstances. It’s then a case of marrying up the two parts of the puzzle, and finding a solution. There are tens of thousands of cars available nationwide for those who have IVAs, so the applicant should not feel unique or embarrassed.
IVA agreements are there to allow you, where possible, to free up your debt and keep your home, while also salvaging some of the money that you owe your debtors. There is a level of strictness involved, so it would not pay to try to get finance without adhering to the conditions.
If you need a car and do not possess the immediate funds to purchase one, getting support from your insolvency practitioner could be the next best step in both securing the vehicle but also continuing to pay off your debts – and eventually enjoy life debt-free.