Yes, you can buy a car during an IVA — but there are rules to follow, and they exist to protect both you and your arrangement. In short, you're free to buy a modest, affordable car outright, but if you need to borrow money or take out car finance, you'll usually need permission first.
Life doesn't stand still for five or six years, and cars break down. Insolvency practitioners understand that a reliable vehicle is often essential for getting to work or looking after a family, so a sensible replacement is rarely a problem — as long as you go about it the right way.
The short answer
- You can buy a car outright during an IVA if you can genuinely afford it.
- Borrowing £500 or more — including most car finance — usually needs your insolvency practitioner's permission.
- A reasonable, everyday car is fine; a luxury vehicle is unlikely to be approved.
- New finance means new monthly costs, so your IVA budget may need reviewing.
- Always ask before signing anything.
Buying a car outright
If you have the cash — perhaps from savings you're allowed to keep, or by selling an old vehicle — you can buy a replacement car without needing anyone's say-so, provided it's a reasonable, practical choice. The key word is reasonable. A dependable runabout to get you to work is entirely sensible. Spending a large sum on something top-of-the-range would sit awkwardly with an arrangement built around paying creditors what you can afford.
Bear in mind that any money you use should genuinely be spare. If you receive a lump sum such as a bonus or an inheritance, that may count as a windfall and could be owed into the IVA rather than spent on a car.
Getting car finance during an IVA
This is where the rules bite. During an IVA, taking on new credit of £500 or more without permission isn't allowed, and most car finance comfortably exceeds that. That doesn't mean finance is off the table — it means you need to speak to your insolvency practitioner (IP) before you apply.
Why permission matters
- New finance adds a monthly cost that has to fit within your budget.
- Your IP needs to be sure the repayments won't put your IVA payments at risk.
- Agreeing it in advance protects you from breaching the terms of your arrangement.
In practice, getting approved for mainstream finance while an IVA is on your credit file can be difficult, because the arrangement lowers your credit score. Any deals available may come with higher interest rates, so it's worth weighing up whether the cost is truly affordable before you commit.
What if my car breaks down and I can't afford a replacement?
If your only car dies and you genuinely can't afford to replace it, don't panic. This is exactly the kind of change in circumstances an IVA is built to handle. You can raise it with your IP, who may be able to agree an adjustment. If money is tight more generally, it's worth reading what to do when you can't keep up your IVA payments, because the same flexible tools — reduced payments and variations — can help.
How a new car affects your IVA budget
Your monthly IVA payment is based on a careful look at your income and essential spending. Running costs for a car — fuel, insurance, tax and maintenance — are usually already built into that budget as an essential expense if you rely on a vehicle. If you add finance repayments, the sums change, and that will normally be picked up at your annual review, where your income and expenditure is looked at again.
Questions worth asking yourself
- Can I realistically afford the monthly repayments alongside my IVA?
- Would a cheaper car bought outright do the job just as well?
- Have I spoken to my IP before agreeing anything?
Life after your IVA
Once your arrangement finishes, these restrictions fall away and your options open up again. Rebuilding matters here: the steps you take to repair your credit score after an IVA can make it easier to access sensible, affordable finance in future. You can also see what to expect in our guide to what happens when your IVA finishes.
How IVA Advice Online can help
If you're wondering how a car purchase fits with your circumstances — or you're just starting to explore whether an IVA is right for you — we're happy to talk it through. Contact IVA Advice Online for free, confidential advice with no obligation. We'll only mention a fee if you decide to go ahead with a solution that has one. For independent guidance on managing money, MoneyHelper is a good free resource too.