Buying a Car in an IVA, Question by Question
What is allowed, what needs permission, and the simplest route.
Can I buy a new car during an IVA?
Sometimes, with permission. You are not flatly banned from getting another car during an IVA, but you cannot just go ahead. Any finance over a small limit needs your supervisor's written agreement first, and whether you get it depends on whether you genuinely need the car and what it would cost. A modest, necessary replacement is far more likely to be approved than an upgrade.
Do I need permission?
Yes, for any credit over about £500. Taking on new borrowing above that threshold without your supervisor's written consent breaches your IVA and could cause it to fail. So before signing any finance agreement, you must ask. Your supervisor will weigh whether the car is essential, whether you can afford it, and whether creditors would accept it before giving the go-ahead.
What kind of car might be approved?
A modest, necessary one at a sensible cost. Approval is most likely where you genuinely need a car, for work or family, and the replacement costs no more per month than your previous one. A practical used car fits this far better than a brand-new or prestige model. The more your request looks like a sensible necessity rather than an upgrade, the better its chances.
Can the new finance cost more than my old car?
Usually not, without good reason. If you are replacing existing car finance, the new monthly payment should be similar to or lower than before. Creditors and your supervisor will generally refuse something significantly more expensive, unless your circumstances have genuinely changed, for example a new baby meaning you need a larger vehicle. Otherwise, like-for-like is the expectation.
Where can the deposit come from?
Not from money owed to your creditors. Any deposit must come from funds you are genuinely allowed to use, not from savings or income that should be going into your IVA. Using creditors' money for a car deposit would breach your arrangement. This is one more reason to agree any purchase with your supervisor first, so the source of the deposit is clear and acceptable.
What will the finance cost?
More than usual, often a lot more. Because an IVA marks your credit file, any finance you can get during it will typically come from specialist lenders at high interest, sometimes very high. It is not unusual for a modest car to cost far more overall once interest is added. This is why, if you can manage without new finance until the IVA ends, it is often worth waiting.
Is buying a cheap car with cash easier?
Often, yes. Saving up from your allowed budget and buying an inexpensive, reliable used car outright avoids credit checks, high interest and, for a small enough sum, the need for permission. It will not be glamorous, but it is yours with no strings. For many people in an IVA, a cheap cash purchase is the most sensible way to stay on the road.
Should I get advice?
Yes, before committing to anything. Your supervisor must be involved in any car purchase on finance, and a free, impartial adviser can help you weigh whether to buy now or wait. They can also make sure you do not breach your IVA by mistake. Getting advice first protects both your arrangement and your wallet from an expensive misstep.
