Understanding Your Rights – Can You Get Car Finance During an IVA?
Navigating car finance can be challenging, especially if you’re currently in an Individual Voluntary Arrangement (IVA). Many people assume that being in an IVA automatically disqualifies them from obtaining car finance, but the reality is more nuanced. We’ll explore your rights regarding car finance during an IVA and offer practical advice to help increase your chances of approval.
What Is an IVA and How Does It Affect Your Finances?
An IVA, or Individual Voluntary Arrangement, is a legally binding agreement between you and your creditors to pay off your debts over a fixed period, typically five to six years. It’s a popular solution for those struggling with unmanageable debt, as it allows you to make affordable monthly payments based on your financial situation. However, being in an IVA does impact your credit score, making it harder to access credit, including car finance.
When you’re in an IVA, your finances are closely monitored by an insolvency practitioner (IP). This professional is responsible for managing your IVA, ensuring that you stick to the agreed payment plan, and that any new financial commitments are affordable. While an IVA does restrict your access to credit, it doesn’t completely close the door on obtaining car finance.
Can You Legally Apply for Car Finance During an IVA?
The short answer is yes, you can legally apply for car finance while in an IVA. However, there are conditions you must meet. The most crucial step is obtaining approval from your insolvency practitioner (IP) before you apply. Your IP needs to confirm that the new finance agreement is affordable and will not jeopardize your ability to make your IVA payments.
Legally, nothing prevents you from seeking car finance during an IVA, but it’s essential to proceed with caution. The new finance agreement must be sustainable within your current budget. If your IP approves and the lender is willing, you can proceed with your application.
Your Rights When Seeking Car Finance in an IVA
It’s important to understand that you have rights when applying for car finance during an IVA. Knowing these rights can empower you to make informed decisions and protect yourself from unfair practices.
- Right to Apply – You have the right to apply for car finance, provided you can afford the repayments and have obtained approval from your IP.
- Right to Transparent Terms – Any lender you approach must provide clear and transparent terms. You should fully understand the interest rates, fees, and repayment schedule before signing any agreement.
- Right to Protection – As a consumer, you are protected from unfair or predatory lending practices. This means that lenders cannot take advantage of your financial situation by offering unfavourable or exploitative terms.
- Right to Informed Consent – You have the right to be fully informed about how taking out car finance might impact your IVA and overall financial health. Your IP should provide guidance on this.
How to Increase Your Chances of Approval
Getting car finance during an IVA can be challenging, but it’s not impossible. Here are some practical tips to help you increase your chances of approval.
- Choose the Right Lender – Not all lenders are willing to work with individuals in an IVA. Focus on lenders who specialize in bad credit or IVA car finance. They are more likely to understand your situation and offer suitable terms.
- Demonstrate Financial Responsibility – Lenders will want to see that you’re managing your finances responsibly. This means keeping up with your IVA payments, maintaining a budget, and avoiding any new debts.
- Consider a Co-Signer – If possible, having a co-signer with a stronger credit history can improve your chances of approval. This person agrees to take responsibility for the loan if you’re unable to make payments.
- Prepare Your Documentation – Before applying, gather all necessary documents, including the approval letter from your IP. This shows the lender that your application is serious and that your IP has approved the finance.
How Motorly Can Help You Navigate IVA Car Finance
At Motorly, we understand the challenges of securing car finance during an IVA. That’s why we’ve partnered with a large panel of lenders who specialize in IVA car finance. Our team is experienced in finding finance solutions tailored to your needs, even if you’re currently in an IVA. We’ll guide you through the process, from obtaining the necessary approvals to finding the right car finance deal.
Getting car finance during an IVA may seem daunting, but with the right approach and understanding of your rights, it’s entirely possible. By working with specialized lenders and maintaining open communication with your insolvency practitioner, you can secure the car finance you need without jeopardizing your financial recovery. If you’re ready to explore your options, contact Motorly today. Our team is here to help you every step of the way.