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Car finance ›
Can I get car finance after bankruptcy?
Updated: Tuesday, 2 January 2024
Declaring bankruptcy can be hugely challenging for anyone at any stage in their life. But as difficult as it may be at the time, it’s not permanent, and people who have previously found themselves bankrupt still have options when it comes to borrowing money for things like car finance.
In this guide, we explore bankruptcy, how it affects your credit, and explain some of your options if you’ve been bankrupt in the past and are looking for car finance.
Declaring bankruptcy can be hugely challenging for anyone at any stage in their life. But as difficult as it may be at the time, it’s not permanent, and people who have previously found themselves bankrupt still have options when it comes to borrowing money for things like car finance.
In this guide, we explore bankruptcy, how it affects your credit, and explain some of your options if you’ve been bankrupt in the past and are looking for car finance.
We specialise in providing car finance for people with bad credit, including people who have previously been declared bankrupt. To be eligible with us, you must have been discharged from your bankruptcy for a minimum of 6 years at the point of application.
If you’re unsure how long it has been since your bankruptcy, you could still apply. We use a soft check which doesn’t affect your credit score and gives you an instant decision.
We specialise in providing car finance for people with bad credit, including people who have previously been declared bankrupt. To be eligible with us, you must have been discharged from your bankruptcy for a minimum of 6 years at the point of application.
If you’re unsure how long it has been since your bankruptcy, you could still apply. We use a soft check which doesn’t affect your credit score and gives you an instant decision.
What is bankruptcy?
Bankruptcy is a legal process that allows people to pay their debts and manage their financial situation. During this process, there will be restrictions around borrowing money. This typically lasts 12 months but may be longer. At the end of this process, you will be considered ‘discharged bankrupt’ and be able to apply for credit again.
For more information, visit the GOV.UK guide to bankruptcy.
Why do people declare bankruptcy?
Bankruptcy is typically a last resort that people turn to when they can’t pay their debts and the amount they owe is more than the value of the assets and things they own.
Going bankrupt means your creditors won’t be able to contact you or take you to court over unpaid debts. However, bankruptcy doesn’t cover all debts. You will still have to make the following repayments:
- Student loans
- Magistrates court fines
- Maintenance and child support payments, including lump sum orders and costs from family proceedings
- Payments ordered by a court under a confiscation order, e.g. money made from drug dealing or fraud
- Debts you owe due to the personal injury or death of another person.
How does bankruptcy affect your credit score?
In the initial period of bankruptcy, usually a year, you cannot apply for credit. According to StepChange, bankruptcy is visible on your credit file for 6 years. This may be longer if the bankruptcy period is extended.
Your credit score represents how likely you are to repay borrowed money, so when you declare bankruptcy, it signals that you have had substantial financial difficulties. This means your credit score will be negatively affected.
A ‘bad’ credit score will make finding car finance more difficult. Even if you are approved, you may be seen as higher risk which means you could be offered higher interest rates.
Visit our guides on what a good credit score is and how to improve your credit rating for more information.
Can you get a car on finance after declaring bankruptcy?
When declared bankrupt, you cannot apply for credit, including car finance. Once you are discharged, you are able to apply for credit.
However, it will be difficult to get approved for car finance if you have been bankrupt, as lenders see you as being a higher risk to lend to. You may have been declined by mainstream lenders, so it’s likely you’ll need to use a specialist lender.
Find out how hard it is to get car finance with help from our guide.
How long should you wait after bankruptcy to apply for car finance?
You cannot apply for credit until you are discharged from your bankruptcy. This may be 12 months, but it can be longer depending on the exact circumstances of your bankruptcy and the length of the bankruptcy period.
Most lenders won’t offer car finance for people who have declared bankruptcy in the past. Once you’re discharged, the more time that passes, the better your chances typically are.
We accept applications from those who have been discharged from bankruptcy a minimum of 6 years.
When you get a quote, we use a soft search which does not affect your credit file, and gives you an immediate decision. Our online form takes less than 5 minutes to fill in, and if you’re approved, our expert team will guide you through the process of financing your new car.
How to improve your credit score after declaring bankruptcy
If you have been declared bankrupt recently or in the past, there are things you can do which can increase your chances of being accepted for credit. One of these things is improving your credit score.
To improve your credit score, you can:
- Make sure you’re on the electoral roll
- Ensure you make payments in full and on time
- Be mindful of your credit utilisation
- Avoid making too many credit applications in a short space of time.
FAQs about getting car finance after bankruptcy
Is there guaranteed car finance for people who have declared bankruptcy?
While some lenders may be more willing to work with people who have bad credit, guaranteed car finance is a myth and does not exist.
It’s a widely promoted claim, but it does not exist. This is because a responsible lender will ensure that any finance they offer is affordable and suited for your circumstances. Because of this, no lender can say car finance is guaranteed, whether you’re a person who has declared bankruptcy in the past, or otherwise.
For more information, please see our guide that explains why guaranteed car finance for bad credit doesn’t exist, and why you should be wary of anyone claiming it does.
Is buying a car with cash the only option for bankrupts?
Being bankrupt doesn’t mean you’re limited to buying a car only with cash, but it can make it more difficult to get a loan or finance agreement. Other options for buying a car include:
- Specialist lenders: some lenders specialise in providing finance to people with poor credit, including those who have been bankrupt in the past.
- Guarantor loans: another option is guarantor car finance, where someone with a good credit history, e.g. a family member, agrees to be responsible for making payments if the applicant is unable to pay.
- Improving your credit score: over time, this can help improve your ability to access credit. Generally speaking, the more time that passes after you’ve been discharged from bankruptcy, the greater your chances of being eligible for car finance.
What credit rating will I have after bankruptcy?
Your credit rating will be negatively affected if you’ve been declared bankrupt in the UK, but it doesn’t drop to a specific number. This is because everyone’s credit score is different, and there are lots of different factors that go into determining your exact score.
Because a bankruptcy leaves a mark for 6 years, getting approved for credit will be difficult, and you will typically find that mainstream lenders won’t approve your application. If you manage to get approved, the interest rates are typically higher than people with good credit.
What is bankruptcy?
Bankruptcy is a legal process that allows people to pay their debts and manage their financial situation. During this process, there will be restrictions around borrowing money. This typically lasts 12 months but may be longer. At the end of this process, you will be considered ‘discharged bankrupt’ and be able to apply for credit again.
For more information, visit the GOV.UK guide to bankruptcy.
Why do people declare bankruptcy?
Bankruptcy is typically a last resort that people turn to when they can’t pay their debts and the amount they owe is more than the value of the assets and things they own.
Going bankrupt means your creditors won’t be able to contact you or take you to court over unpaid debts. However, bankruptcy doesn’t cover all debts. You will still have to make the following repayments:
- Student loans
- Magistrates court fines
- Maintenance and child support payments, including lump sum orders and costs from family proceedings
- Payments ordered by a court under a confiscation order, e.g. money made from drug dealing or fraud
- Debts you owe due to the personal injury or death of another person.
How does bankruptcy affect your credit score?
In the initial period of bankruptcy, usually a year, you cannot apply for credit. According to StepChange, bankruptcy is visible on your credit file for 6 years. This may be longer if the bankruptcy period is extended.
Your credit score represents how likely you are to repay borrowed money, so when you declare bankruptcy, it signals that you have had substantial financial difficulties. This means your credit score will be negatively affected.
A ‘bad’ credit score will make finding car finance more difficult. Even if you are approved, you may be seen as higher risk which means you could be offered higher interest rates.
Visit our guides on what a good credit score is and how to improve your credit rating for more information.
Can you get a car on finance after declaring bankruptcy?
When declared bankrupt, you cannot apply for credit, including car finance. Once you are discharged, you are able to apply for credit.
However, it will be difficult to get approved for car finance if you have been bankrupt, as lenders see you as being a higher risk to lend to. You may have been declined by mainstream lenders, so it’s likely you’ll need to use a specialist lender.
Find out how hard it is to get car finance with help from our guide.
How long should you wait after bankruptcy to apply for car finance?
You cannot apply for credit until you are discharged from your bankruptcy. This may be 12 months, but it can be longer depending on the exact circumstances of your bankruptcy and the length of the bankruptcy period.
Most lenders won’t offer car finance for people who have declared bankruptcy in the past. Once you’re discharged, the more time that passes, the better your chances typically are.
We accept applications from those who have been discharged from bankruptcy a minimum of 6 years.
When you get a quote, we use a soft search which does not affect your credit file, and gives you an immediate decision. Our online form takes less than 5 minutes to fill in, and if you’re approved, our expert team will guide you through the process of financing your new car.
How to improve your credit score after declaring bankruptcy
If you have been declared bankrupt recently or in the past, there are things you can do which can increase your chances of being accepted for credit. One of these things is improving your credit score.
To improve your credit score, you can:
- Make sure you’re on the electoral roll
- Ensure you make payments in full and on time
- Be mindful of your credit utilisation
- Avoid making too many credit applications in a short space of time.
FAQs about getting car finance after bankruptcy
Is there guaranteed car finance for people who have declared bankruptcy?
While some lenders may be more willing to work with people who have bad credit, guaranteed car finance is a myth and does not exist.
It’s a widely promoted claim, but it does not exist. This is because a responsible lender will ensure that any finance they offer is affordable and suited for your circumstances. Because of this, no lender can say car finance is guaranteed, whether you’re a person who has declared bankruptcy in the past, or otherwise.
For more information, please see our guide that explains why guaranteed car finance for bad credit doesn’t exist, and why you should be wary of anyone claiming it does.
Is buying a car with cash the only option for bankrupts?
Being bankrupt doesn’t mean you’re limited to buying a car only with cash, but it can make it more difficult to get a loan or finance agreement. Other options for buying a car include:
- Specialist lenders: some lenders specialise in providing finance to people with poor credit, including those who have been bankrupt in the past.
- Guarantor loans: another option is guarantor car finance, where someone with a good credit history, e.g. a family member, agrees to be responsible for making payments if the applicant is unable to pay.
- Improving your credit score: over time, this can help improve your ability to access credit. Generally speaking, the more time that passes after you’ve been discharged from bankruptcy, the greater your chances of being eligible for car finance.
What credit rating will I have after bankruptcy?
Your credit rating will be negatively affected if you’ve been declared bankrupt in the UK, but it doesn’t drop to a specific number. This is because everyone’s credit score is different, and there are lots of different factors that go into determining your exact score.
Because a bankruptcy leaves a mark for 6 years, getting approved for credit will be difficult, and you will typically find that mainstream lenders won’t approve your application. If you manage to get approved, the interest rates are typically higher than people with good credit.
For a better road ahead
Moneybarn is a member of the Finance and Leasing Association, the official trade organisation of the motor finance industry. The FLA promotes best practice in the motor finance industry for lending and leasing to consumers and businesses.
Moneybarn is the trading style of Moneybarn No. 1 Limited, a company registered in England and Wales with company number 04496573, and Moneybarn Limited, a company registered in England and Wales with company number 02766324. The registered address for these companies is: Athena House, Bedford Road, Petersfield, Hampshire, GU32 3LJ.
Moneybarn’s VAT registration number is 180 5559 52.
Moneybarn Limited is authorised and regulated by the Financial Conduct Authority (Financial Services reference No. 702781)
Moneybarn No. 1 Limited is authorised and regulated by the Financial Conduct Authority (Financial Services reference No. 702780)
