Car Finance and Debt Management Plan – Everything you need to know

Shopping for a new car can sometimes be a challenging process, especially if your personal circumstances could get in the way of you obtaining the car that you want. A bad credit history can affect your eligibility for securing car finance, as well as other factors such as being in an IVA or having CCJs against your name.

If you have had issues with your finances in the past, it is possible that you are currently in a Debt Management Plan (DMP), which can often lead to problems obtaining the car finance you need.

At Motorly, we specialise in helping people get behind the wheel of a new car, whatever their credit history. Whilst being in a Debt Management Plan will mean that you have a few more actions to take to get finance, we can help you every step of the way.

What is a Debt Management Plan?

A Debt Management Plan (DMP), is a program put in place by a DMP provider to help you manage and control your debts in a way that is both responsible and manageable. Debt Management Plans can be a suitable route to take for those with the following debts:

• Overdraft debts
• Store cards and credit cards
• Personal Loans
• Catalogues and in-store credit debts

A debt management plan cannot help with certain ‘priority debts’ such as:

• Council tax bills
• Gas and electricity utility bills
• Child support and maintenance costs
• Income tax bills
• National Insurance
• VAT bills
• Mortgage and rent arrears
• Court fines and charges
• Essential hire purchases

Your debt consultant will organise your Debt Management Plan to ensure that you start to reduce the debt you owe in the most efficient way. Each month, you will pay a fee to the Debt Management Plan provider, who will then pay the money to your creditors on your behalf. In doing so, your plan provider will assist you in keeping track of your obligations and stop you from spending your money irresponsibly.

Is it possible to get Car Finance when I am under a Debt Management Plan?

If you are currently in a debt management plan, it can be hard to make new purchases. This is because your Debt Management Provider will be stringent when deciding what new expenditure you are allowed to take on. This is particularly true when it comes to purchasing a new car.

However, it is still possible to get a car finance agreement approved when you are in a DMP. You will need to show that your new car is an essential purchase (such as being able to get to work), and also show that the vehicle is affordable within your agreed budget, without having an impact on your existing debt agreements.

When your Debt Management Provider is checking to see if your car is a necessity purchase, they will consider the following:

• Do you care for a vulnerable or elderly person? If you take care of a relative who is elderly or vulnerable, you will likely need the car for shopping trips and journeys to the doctor etc. Your DMP will likely accept that the car is required in this case.
• Do you have any health problems or issues? If you have a health condition that affects your ability to travel, your DMP could decide that your car is a necessity.
• Are you a parent or guardian? The school run is a major use of the car for many people. Your DMP provider will usually agree that a car is required in these instances.
• How long is your commute to work? The daily commute to your place of work is likely to be the biggest reason for needing a car. Simply put, if you can’t get to work you aren’t able to earn money. Your DMP provider will typically agree that you require a car in these circumstances.

Can you afford the car payments?

The most important factor you need to consider when looking into car finance is whether you can afford to pay the payments constantly for the lifetime of the contract. By taking out a car finance agreement, this debt will be added to the plan that your provider is managing.

The Motorly team can help you understand how the process works, help you find a suitable car for your budget and perform a credit check.

Are you eligible for car finance?

If you are currently in a Debt Management Plan, you are likely to have a lower credit score. This is due to the level of debt you currently have, along with the fact that a DMP is in place, showing up on your credit file. However, whilst it can make it harder to get car finance, it is still possible to get an agreement that is suitable for your circumstances.

Motorly is a specialist at finding car finance solutions for those with fair to poor credit scores, including those in an IVA or Debt Management Plan. We offer bad credit car finance and debt management car finance plans that enable people just like you to get behind the wheels of a new car.

Would a bad credit car finance deal be right for you?

If you currently have a bad credit score, it’s still possible to find a finance deal that is right for your needs. Motorly has a wealth of experience in helping those with bad credit find the perfect finance solution for their needs.

If you’d like to find out more, go to the Motorly bad credit car finance page