If your car is subject to finance such as Hire Purchase (HP) or Personal Contract Purchase (PCP), the position can be different from owning the vehicle outright.
On this page
- Can you keep your car with an IVA?
- What happens to car finance when you enter an IVA?
- Can you keep a car on Hire Purchase with an IVA?
- Can you keep a PCP car with an IVA?
- What if you own your car outright?
- Does the value of your car matter?
- Can you get car finance during an IVA?
- Do you need permission to get car finance during an IVA?
- What if you need a car for work?
- Can you afford car finance during an IVA?
- Frequently Asked Questions
Can You Keep Your Car With an IVA?
In many cases, yes. An IVA does not automatically mean that your car will be taken from you.
What happens to your vehicle will depend on factors such as whether you own it outright or have finance outstanding, the value of the vehicle and whether you need it for work or other essential purposes.
If you own the car outright, its value may be considered as part of your assets when your IVA is proposed. However, this does not necessarily mean that you will have to sell it.
If the car is subject to Hire Purchase or PCP finance, the position is different because you may not legally own the vehicle until the finance agreement has been completed.
Your Insolvency Practitioner should assess your circumstances and explain how your particular vehicle and finance agreement will be treated.
What Happens to Car Finance When You Enter an IVA?
If you already have car finance when you enter an IVA, the agreement needs to be considered as part of your overall financial circumstances.
Car finance payments can be included when your income and expenditure are assessed. The important question is whether the vehicle and the finance payments are considered reasonable and sustainable within your circumstances.
The type of finance also matters. With Hire Purchase or PCP, the finance company normally retains an interest in the vehicle until the agreement is completed. This means the treatment of the agreement can be different from a car that you own outright.
The current IVA Protocol requires the Insolvency Practitioner to consider likely changes to ongoing contracted payments, including hire purchase agreements, when assessing whether an IVA is sustainable.
If you are already paying for a vehicle, do not simply stop making the payments because you are entering an IVA. The finance agreement and your proposed IVA should be considered together.
Can You Keep a Car on Hire Purchase With an IVA?
It can be possible to keep a car on Hire Purchase while you are in an IVA.
However, your Insolvency Practitioner will need to consider the finance agreement, the amount of the payments, the remaining term and whether the vehicle is reasonable for your circumstances.
If the finance agreement is due to finish during the IVA, this may also need to be taken into account when your IVA is assessed.
You should provide your Insolvency Practitioner with details of your finance agreement, including the outstanding balance, monthly payment and remaining term.
Do not assume that every Hire Purchase agreement will be treated in exactly the same way. The terms of your finance agreement and your individual IVA proposal are important.
Can You Keep a PCP Car With an IVA?
PCP finance can require particular consideration because the agreement normally includes a final balloon payment if you want to own the vehicle at the end of the contract.
If you are already paying for a car under PCP when you enter an IVA, tell your Insolvency Practitioner about the agreement. They can consider the monthly payments and the future position of the vehicle when assessing your IVA.
If your PCP agreement is coming to an end during your IVA, you should discuss your options before making any decision about the vehicle.
In particular, do not assume that you will automatically be able to take out new finance to replace the vehicle. Obtaining new credit during an IVA is subject to restrictions.
What If You Own Your Car Outright?
If you own your car outright, it is an asset and its value may be taken into account when your IVA is proposed.
This does not necessarily mean that you will have to sell the vehicle. The treatment of a car depends on its value, your circumstances and the terms of the IVA.
A vehicle that is necessary for work or essential family needs may be treated differently from an expensive vehicle that is not considered necessary.
Your Insolvency Practitioner should explain how your vehicle will be treated before you agree to the IVA.
Does the Value of Your Car Matter in an IVA?
Yes. The value of a vehicle can be relevant when an IVA is being considered.
The Insolvency Practitioner will look at your assets as part of the assessment of your financial circumstances. This includes considering the value of vehicles that you own.
However, there is no simple rule that says a car above or below a particular value will automatically be kept or taken.
The circumstances surrounding the vehicle matter. For example, whether you need it to travel to work, whether there is suitable public transport and whether the vehicle is reasonable for your household circumstances may all be relevant.
If you are concerned about your car, make sure its value and your reasons for needing it are discussed before you enter into an IVA.
Can You Get Car Finance During an IVA?
Getting new car finance during an IVA can be difficult and you should not assume that you can simply apply for finance in the normal way.
Under the standard terms of the 2025 IVA Protocol, you generally need the written approval of your Supervisor before obtaining credit of more than £500 during the IVA, subject to specific exceptions.
This means that if your existing vehicle needs replacing, you should speak to your Insolvency Practitioner before applying for finance.
They will need to consider whether the new vehicle is necessary, whether the proposed finance is affordable and whether taking on the new commitment is consistent with the terms of your IVA.
Applying for finance without first checking the position could potentially put you in breach of your IVA.
Do You Need Permission to Get Car Finance During an IVA?
If the proposed borrowing is more than £500, you will generally need your Supervisor's written approval under the standard IVA Protocol terms.
This is important because an IVA is a legally binding arrangement and there are restrictions on taking on new credit during the arrangement.
If your car has broken down or you need to replace it for work, explain the situation to your Insolvency Practitioner before arranging finance.
They can tell you whether the proposed borrowing is permitted and whether any further approval is required under your particular IVA.
What If You Need a Car for Work?
Needing a vehicle to get to work can be an important consideration when your IVA is assessed.
If you live somewhere with limited public transport, work shifts or need a vehicle as part of your job, losing access to a car could make it difficult to maintain your income.
These circumstances should be explained to your Insolvency Practitioner. The affordability assessment should take account of reasonable expenditure required to maintain your household and employment.
However, needing a car does not necessarily mean that any particular vehicle or finance agreement will be accepted. The cost needs to be reasonable in the context of your circumstances.
Can You Afford Car Finance During an IVA?
Affordability is one of the most important considerations.
An IVA is based on what you can reasonably afford to pay towards your debts after allowing for your household expenditure. A car finance agreement therefore needs to be considered alongside your other essential costs.
If you are already struggling to make your IVA payment, taking on additional finance may not be appropriate.
Equally, if your existing car finance is coming to an end and you genuinely need a vehicle, you should raise the issue with your Insolvency Practitioner before the agreement ends rather than waiting until you need to replace the car.
What Happens to Car Finance When an IVA Ends?
When your IVA is successfully completed, debts that are subject to the arrangement are generally released in accordance with its terms.
However, secured lending and finance agreements involving an asset can operate differently from ordinary unsecured debts. If you still have an ongoing finance agreement when your IVA ends, you should check the terms of that agreement and obtain advice about your position.
If you are considering an IVA, it is important to understand how your particular vehicle and finance agreement will be treated before the arrangement is approved.
You can also read our guide to what an IVA is or learn more about how IVAs work.
Frequently Asked Questions
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