WILL I LOSE MY CAR IF I HAVE AN IVA | February 2024
Will I lose my car if I have iva?

February 2024

Will I Lose My Car if I Have an IVA in February 2024

Suppose you are in a precarious financial position or a large amount of debt. In that case, you may be worried about what might happen to your significant assets should you commit to various debt solutions. Your car is likely to be one of your most expensive possessions, so you may wonder: could I lose my car if I have an IVA?

Topics that you will find covered on this page

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What is an IVA?

An IVA (or Individual Voluntary Arrangement) is a type of debt solution that allows you to pay off your debts in a more realistic way. Usually, an IVA is available to individuals who owe at least £6,000 in unsecured debt.

An IVA is a legally binding arrangement in which you are supported in repaying debt while agreeing to contribute a specific amount of money each month for a set duration, usually five years. The monthly repayment is then used to repay your creditors.

Will I lose any of my personal possessions if I take out an IVA?

In general, the answer is no; you will not be forced to sell any of your personal possessions under an IVA debt solution. This includes your car, your home, and your personal belongings. Your creditors cannot force you to sell any of your possessions in order to repay your debts.

When planning the specifics of your IVA proposal, creditors will examine the value of your possessions. However, they will only request that you sell them if they are deemed to be a luxury and if they think the money from the sale will be more beneficial to you by paying off debts than it would be to keep them.

Can I keep my car in an IVA?

If you have an IVA, you will not automatically lose your car. However, there are a few circumstances under which this could happen. For example, if you miss any of your monthly payments, or if the value of your car increases significantly during the course of your IVA.

Your car may be repossessed if you default on the payments that you agree to under the IVA proposal. However, as long as you keep up with the agreed-upon payments, you will be able to keep your car.

If you are concerned about the potential of losing your car, or any other assets, it is essential to speak to a qualified debt relief specialist who can advise you on the best options available to you. They will be able to assess your individual circumstances and provide you with tailored advice.

There are a number of factors which might influence whether you can definitely keep your car:

The value of the car

No matter what type of car finance you have, there’s a chance you might have to sell your vehicle or downgrade to a cheaper car.

Your Insolvency Practitioner will be aiming to find the best compromise between you and for your creditors – but that could be difficult if you’ve only got limited funds to repay your debts because you’re driving an expensive vehicle with high running and upkeep costs. 

They also have a duty to your creditors to try and recoup as much money as possible, so you will likely be asked to look at cheaper options for your vehicle.

That is an extreme example: creditors will be required to deal with IVA applications virtually every day – and they are unlikely to be unreasonable about them. At the end of the day, if you have transport that allows you to go to work, your creditors are more likely to get repaid if you owe money – therefore, keeping a modest car with a minimal monthly payment may be reasonable.

What kind of finance product you have used?

In the case that you do not own your car outright but instead acquired it under an HP agreement, your creditors may allow you to continue paying for the car for the entire term of the HP agreement and when that is completed, ask you to increase the monthly contributions you make to your IVA by the amount of the now terminated monthly HP payments.

Similarly, if you’ve taken a personal loan or unsecured loan out to buy your vehicle outright, then that’s another kind of debt which will need to be factored into your monthly repayments.

However, if you’re paying for your vehicle using a ‘normal’ credit card – or even a store card from a major retailer – an IVA will have no impact on whether or not you can keep the automobile. After all, creditors are far more concerned about regaining their money than about having a specific item returned to them.

Your job and your income

A big part of the decision about whether you can keep your car in an IVA will come down to whether or not doing so enables you to keep working.

does an iva affect car finance

If the public transportation options to your workplace are excellent, or if you live close enough to walk or bike, it may be feasible for you to sell your card and use the money to help pay off some of your debt.

However, if you need a vehicle to do your job – assume you’re a delivery man or travel between several locations as part of your employment – then holding on to it is likely to be crucial. However, you may still be asked to consider a cheaper one.

Of course, even if using public transport is an option, it might not be a realistic one for you. If you’ve got young children, for example, then using public transport might not be practical.

The same goes if you have a disability which makes using public transport difficult or impossible – in these cases, keeping your car is likely to be essential.

Ultimately, the decision over whether or not you can keep your car during an IVA will be down to your individual circumstances. If you’re worried about what could happen to your car, the best thing to do is speak to a qualified debt relief specialist who can advise you on the best options available to you. They will be able to evaluate your individual circumstances and provide you with tailored debt advice.

"An IVA is a legally binding arrangement in which you are supported in repaying debt while agreeing to contribute a specific amount of money each month for a set duration, usually five years. The monthly repayment is then used to repay your creditors."

Can I change my car in an IVA?

Once you’ve started an IVA, you might find that your circumstances have changed – and as a result, you might need to change your car. For example, you might need to upgrade to a bigger car to accommodate a growing family, or you might need to downgrade to a cheaper vehicle because your income has decreased.

In either case, you can apply to your Insolvency Practitioner for permission to make the change. They will assess your application and may permit you to do so if they think it is in the best interests of both you and of your creditors. If you’re thinking about changing your car during an IVA, the best thing to do is speak to a qualified debt relief specialist who can advise you on the best course of action.

iva car finance

Can I get car finance if I have an IVA?

If you’re thinking about taking out a car finance agreement during an IVA, it’s vital to get professional advice before doing so. This is because taking on more debt is likely to make your IVA more difficult to successfully complete.

Your Insolvency Practitioner is tasked with advising you on whether or not taking out a car finance agreement is the right thing to do in your individual circumstances. They will also be empowered to negotiate with your creditors on your behalf to try and come to a solution that is acceptable to all parties involved.

So how do I prove to my Insolvency Practitioner that I should take on a new car finance agreement?

If you want to prove to your insolvency practitioner that you should take out a new vehicle finance plan, you’ll need to show that doing so is in the best interests of both you and your creditors.

You’ll need to show that you can commit to paying the loan back and that the vehicle you want to purchase is reasonable based on your needs and your job or family life. You should also be prepared to exhibit that you’ve thoroughly weighed all other alternatives, such as selling your vehicle, and that taking out a new loan agreement is the greatest option available to you.

If you’re unsure how to proceed, the best thing to do is contact a debt help professional who will be able to advise you on the best course of action. They will be able to evaluate your situation and provide personalized recommendations based on your individual circumstances.

What car financing options are available?

If you’re looking for a new vehicle finance agreement, there are a few different options available to you. The best option for you will vary depending on your individual circumstances, so it’s essential to get professional advice before making a decision.

You might, for example, be able to take out a personal loan or enter into a hire purchase agreement. You could also look into getting finance through a dealership, although this is likely to be more expensive than other options.

car leasing with an iva

Can I get Hire Purchase during an IVA?

This type of credit agreement is a popular choice for individuals who are looking to purchase a vehicle. Under a Hire Purchase (HP) arrangement, you pay an upfront fee – your deposit – and the rest of the cost is split across monthly IVA payments. Once you make the final payment to the HP company, you will automatically own the car.

HP always comes with interest, known as APR. APR (Annual Percentage Rate) refers to the amount you will end up paying on top of your original borrowed amount. Like interest, APR varies hugely depending on the lender. The total cost of credit on an HP agreement is therefore the total price of the vehicle added to the APR amount, spread over the duration of the plan.

It is definitely possible to get a Hire Purchase plan while using an IVA, though it is not always straightforward.

If you have an Individual Voluntary arrangement (IVA), your insolvency practitioner will want to make sure you don’t overpay for the plan and may push you to examine alternatives such as public transport while you’re still on an IVA.

What about PCP or a lease?

Like under HP, with PCP (Personal Contract Purchase), you will place a deposit on the vehicle and begin making payments towards it for a fixed period of time – with APR included.

However, the vehicle will still belong to the finance company after your agreement is up unless you make a balloon payment towards it. The balloon payment is a one-time sum that you will pay at the conclusion of your plan to acquire ownership of the vehicle outright.

The lump sum is usually a not insignificant fee which is calculated based on what the lender estiamtes the vehicle will be worth once your finance deal terminates.

IVA holders will find getting a PCP deal almost as challenging as they would getting an HP agreement. Because in neither case do you own the vehicle – or won’t until the end of the agreement – your Insolvency Practitioner may be forced to end your agreement prematurely or recommend more affordable alternatives.

Can I purchase a car with a personal loan?

Purchasing a car with a personal loan is slightly different. In the case that you purchased a car with a loan going into your IVA, you would include it in the original arrangement. You are considered to be the owner of the car, therefore will have to keep up with monthly payments if you want to keep the vehicle.

If you want to purchase a vehicle with a loan during an IVA, you may find it more challenging to finance. Because the IVA will be evident in your credit history, most lenders will be reluctant to let you borrow from them, so you might have to seek out a specialist lender in order to obtain credit.

What might the impact be on my credit rating?

An Individual Voluntary Agreement is a form of insolvency – that means details of your debts and the arrangement are recorded on the formal Insolvency Register, as well as your credit file.

This will lower your credit score and give an indication to lenders that you may have had a poor credit history, making mainstream lenders more cautious when it comes to entering a finance agreement with you.

As well as meaning you will not have a good credit score, being in an IVA will also limit the car finance programmes for which you are eligible.

Can I get car finance after an IVA?

Your IVA will be removed from the Insolvency Register immediately after you make your final payment. It will stay on your credit report for up to six years, depending on the length of your IVA. This can have a major impact on your credit rating for a significant period of time.

Even though you don’t need anyone’s approval to apply for credit any more, finding a suitable lender may be difficult. In this case, waiting until your bad credit score has recovered before applying for automobile finance is the greatest option since you’ll be able to get better terms.

However, this is not an option if you are in desperate need of a car. Just like during an IVA, approaching a variety of lenders can be a good idea. Credit unions may be a good option if you are struggling to find companies that will approve your application.

can I get car finance with an iva

Where can I get more information on car finance and IVAs?

If you’re struggling with debts and considering an IVA, it’s important to seek professional advice on debt management. An Insolvency Practitioner licensed by the insolvency practitioners association can offer guidance on the best way to deal with your debts and provide information on the different types of insolvency procedures available to you.

When it comes to car finance, make sure you shop around for the best deal and compare offers from a range of lenders, taking your personal circumstances into account.

You can also find more information on car finance, IVAs and free debt advice by visiting the Money Advice Service website. The Money Advice Service is an independent service set up by the government that offers free and impartial money advice. 

Their website includes a range of helpful articles on topics like car finance, as well as debt management and debt solutions and can help you find the right solution for your situation.

Article author

Katy Davies

I am a keen reader and writer and have been helping to write and produce the legal content for the site since the launch.   I studied for a law degree at Manchester University and I use that theoretical experience, as well as my practical experience as a solicitor, to help produce legal content which I hope you find helpful.

Outside of work, I love the snow and am a keen snowboarder.  Most winters you will see me trying to get away for long weekends to the slopes in Switzerland or France.

Email – [email protected]

Frequently Asked Questions

What is an IVA?

An IVA (or Individual Voluntary Arrangement) is a type of debt solution that allows you to pay off your debts in a more realistic way. Usually, an IVA is available to individuals who owe at least £6,000 in unsecured debt.

Will I lose any of my personal possessions if I take out an IVA?

In general, the answer is no; you will not be forced to sell any of your personal possessions under an IVA debt solution. This includes your car, your home, and your personal belongings. Your creditors cannot force you to sell any of your possessions in order to repay your debts.

Can I change my car in an IVA?

Once you’ve started an IVA, you might find that your circumstances have changed – and as a result, you might need to change your car. For example, you might need to upgrade to a bigger car to accommodate a growing family, or you might need to downgrade to a cheaper vehicle because your income has decreased.

What car financing options are available?

If you’re looking for a new vehicle finance agreement, there are a few different options available to you. The best option for you will vary depending on your individual circumstances, so it’s essential to get professional advice before making a decision.

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Disclaimer: Please be aware that this site is no longer under active management. As a result, we cannot assure the accuracy or relevance of the content provided. Visitors should use their discretion and consider the potential for outdated or inaccurate information before relying on any material found here.