Can you get HP car finance with an IVA?
Written by
Joe Towner
Reviewed by
Amy LancashireYes, you can get hire purchase (HP) car finance while you're in an IVA, but it's restricted. You'll almost always need written permission from your insolvency practitioner first and you may not get access to most high street lenders. If you can find a deal it will be more likely to come from specialist lenders at higher interest rates. It’s worth carefully considering if the car is essential and the payments fit within your IVA budget.
Here's how it works, what you'll need, and where to get free help before you commit to anything.
What is an IVA, and why does it affect car finance?
An IVA (Individual Voluntary Arrangement) is a formal, legally binding agreement to pay off your debts over time, supervised by a licensed insolvency practitioner (IP). Because it's a legal arrangement with your creditors, taking on new credit while it runs is limited. You can read more about what an IVA is and how it works in our full guide.
The key restriction: most IVAs don't let you take on more than £500 of credit without your IP's written permission, according to StepChange. A car finance agreement is likely to be over that, so you'll always need their approval first. Applying without it can be treated as breaking the terms of your IVA, which could put the whole arrangement at risk.
Can I get HP while I'm in an IVA?
Yes, but only with your IP's agreement. HP can be more workable than other car finance during an IVA for two reasons. It's secured against the car, in the same way as any secured form of borrowing, which lenders see as lower risk. And unlike PCP, there's no large final balloon payment to plan for, just fixed monthly payments until the car is yours. If you want the full picture on the two, see our guide on how hire purchase compares to PCP.
What you'll need to be approved
Getting HP during an IVA usually comes down to four things:
Your IP's written permission. Speak to them first. They'll look at whether a new agreement is sensible for your situation before giving approval.
Proof the car is essential. You'll generally need to show why you need it, for example for work, health, or caring responsibilities.
Payments that fit your budget. The monthly cost has to fit your agreed income and spending without reducing what goes to your creditors.
A specialist lender. Because you have an IVA on your file, you'll likely need a lender that accepts customers with adverse credit, rather than a high street bank.
The risk of getting credit with an IVA
Be realistic about the cost. Specialist lenders that accept IVA customers typically charge higher interest than mainstream lenders, so the same car costs more to finance than it would for someone with a good credit score. Weigh up whether you need the car now, or whether waiting until your IVA is closer to finishing would get you a better deal. Risking your arrangement can have serious financial consequences.
What happens to car finance I already have if I start an IVA?
If you already have a car on HP when you start an IVA, you may be able to keep making the payments and keep the car, as long as the payments are affordable and your IP agrees the car is necessary. Because HP is secured, though, the car can be at risk if you fall behind. If you've already paid at least a third of the total amount, the lender needs a court order to repossess it. Tell your lender straight away if you're struggling, as they may be able to help.
Where to get free help
You don't have to work this out alone, and you should never pay for debt advice. Start with your insolvency practitioner, who knows your arrangement. For free, independent advice, you can also speak to StepChange, Citizens Advice, or the government's guidance on dealing with your debts.
Car Finance with IVA FAQs
There are a range of financial products available that may suit your needs. We encourage you to research your options carefully and consider seeking independent financial advice before making any decisions. This blog is for informational purposes only and does not constitute financial advice.
