Can I get car finance on a Debt Management Plan?

Daniel Timblick, Senior Credit Risk Analyst, Tuesday, 6 February 2024
Updated: Thursday, 8 February 2024

Yes, you can still apply for car finance if you’re on a Debt Management Plan (DMP). Having a DMP or being on one in the past may negatively impact your credit score, which could affect your eligibility for financial products like car finance agreements.

In this guide, we explore the topic of getting car finance agreements with Debt Management Plans in more detail to help you make an informed decision about what’s best for you when looking to purchase a vehicle on finance.

What is a Debt Management Plan?

A Debt Management Plan (DMP) is an informal arrangement between you and your creditors (the people or companies to whom you owe money) to organise the repayment of outstanding debts. It allows you to follow a more manageable payment plan for a set period by making smaller monthly payments.

A DMP is only for non-priority debts, such as credit card debts, personal loans, and store cards, not for priority debts, which include things like mortgage payments, gas and electricity bills, and income tax arrears. Read our full guide for more information about what Debt Management Plans are and how they work.

Can I get car finance on a Debt Management Plan?

Whether you can apply for car finance depends on the terms of your DMP. Your DMP agreement is likely to state that you cannot take out any additional credit without permission from your DMP provider.

If you want to purchase a car while in a DMP, you will need agreement from your DMP provider. This is usually only done in cases where having a car is essential to your daily life, such as commuting to work or getting around where you otherwise could not.

If you’ve had a DMP in the past, it means you’ve struggled to make repayments before. Lenders will view you as riskier to lend to, but that doesn’t make it impossible. It just means you might need to use a specialist lender who can help

There are never any guarantees when it comes to applying for credit, whether it’s for a car finance deal, a personal loan, a mortgage or otherwise. Your eligibility will depend on a range of factors, including your credit report, financial situation, and your monthly income.

Regardless of whether you have a DMP or not, responsible lenders will always carry out credit and affordability checks before approving your application. This is to ensure you can manage any monthly payments.

What are acceptable reasons for car finance while on a DMP?

When you get a Debt Management Plan, you may already have a car, or you may be looking to buy one. If you can justify why you need access to a vehicle to keep up with the monthly payments on your DMP, your provider may be more likely to approve your request for car finance.

Factors which can strengthen your case for getting car finance while on a DMP include:

Yes, you can still apply for car finance if you’re on a Debt Management Plan (DMP). Having a DMP or being on one in the past may negatively impact your credit score, which could affect your eligibility for financial products like car finance agreements.

In this guide, we explore the topic of getting car finance agreements with Debt Management Plans in more detail to help you make an informed decision about what’s best for you when looking to purchase a vehicle on finance.

What is a Debt Management Plan?

A Debt Management Plan (DMP) is an informal arrangement between you and your creditors (the people or companies to whom you owe money) to organise the repayment of outstanding debts. It allows you to follow a more manageable payment plan for a set period by making smaller monthly payments.

A DMP is only for non-priority debts, such as credit card debts, personal loans, and store cards, not for priority debts, which include things like mortgage payments, gas and electricity bills, and income tax arrears. Read our full guide for more information about what Debt Management Plans are and how they work.

Can I get car finance on a Debt Management Plan?

Whether you can apply for car finance depends on the terms of your DMP. Your DMP agreement is likely to state that you cannot take out any additional credit without permission from your DMP provider.

If you want to purchase a car while in a DMP, you will need agreement from your DMP provider. This is usually only done in cases where having a car is essential to your daily life, such as commuting to work or getting around where you otherwise could not.

If you’ve had a DMP in the past, it means you’ve struggled to make repayments before. Lenders will view you as riskier to lend to, but that doesn’t make it impossible. It just means you might need to use a specialist lender who can help

There are never any guarantees when it comes to applying for credit, whether it’s for a car finance deal, a personal loan, a mortgage or otherwise. Your eligibility will depend on a range of factors, including your credit report, financial situation, and your monthly income.

Regardless of whether you have a DMP or not, responsible lenders will always carry out credit and affordability checks before approving your application. This is to ensure you can manage any monthly payments.

What are acceptable reasons for car finance while on a DMP?

When you get a Debt Management Plan, you may already have a car, or you may be looking to buy one. If you can justify why you need access to a vehicle to keep up with the monthly payments on your DMP, your provider may be more likely to approve your request for car finance.

Factors which can strengthen your case for getting car finance while on a DMP include:

One

If you live in a remote area without access to a reliable public transport network.

If you need your car to commute to work and run essential errands, your DMP provider may be more inclined to support your application, especially if you live in a rural or remote area.

Two

If you need to travel long distances for work.

If you aren’t able to get to your place of work, you won’t be able to earn a regular monthly income, meaning you’ll be less able to keep up with the payments on your DMP.

Three

If you have a young family to provide for or are a carer.

If you need a vehicle to do the school run, drop your children off at nursery, or if you are responsible for someone else’s care, this could be grounds for getting a car on a DMP.

Four

If you have health or mobility problems that make access to a car essential.

A car might be the only way for you to get from place to place. If you don’t want to, or can’t afford to purchase a car outright, car finance may be a convenient alternative.

One

If you live in a remote area without access to a reliable public transport network.

If you need your car to commute to work and run essential errands, your DMP provider may be more inclined to support your application, especially if you live in a rural or remote area.

Two

If you need to travel long distances for work.

If you aren’t able to get to your place of work, you won’t be able to earn a regular monthly income, meaning you’ll be less able to keep up with the payments on your DMP.

Three

If you have a young family to provide for or are a carer.

If you need a vehicle to do the school run, drop your children off at nursery, or if you are responsible for someone else’s care, this could be grounds for getting a car on a DMP.

Four

If you have health or mobility problems that make access to a car essential.

A car might be the only way for you to get from place to place. If you don’t want to, or can’t afford to purchase a car outright, car finance may be a convenient alternative.

It’s important to remember, though, that the cost of owning or being the registered keeper of a vehicle isn’t limited to the monthly repayments you’ll be expected to make to your finance provider. You’ll also need to factor in additional expenses such as insurance, road tax, annual servicing and MOTs, and breakdown cover, amongst other things.

How does a Debt Management Plan affect your credit score?

Having a Debt Management Plan can impact your credit score. This is because your payments will be lower than the amount you originally agreed to repay each month when first taking out the loan or entering into the finance agreement.

Whilst being on a DMP can have a negative impact on your credit score, so too will any late or missed payments. In fact, Experian have said that, in some situations, getting a DMP to manage debt can have less of an effect than falling into more serious difficulties with lenders.

If you’re worried about your credit report or what a bad credit score might mean for your eligibility, you can learn more by reading our full guides on what affects your credit score and how to check your credit score.

Car finance with Moneybarn

If you have a Debt Management Plan or a bad credit history, getting approved for car finance can be more difficult.

We carry out thorough credit and affordability checks on all finance applications we receive, regardless of whether you are on a DMP or not. If your credit file and financial profile fit our lending criteria, we might be able to provide you with the car finance agreement you need.

We specialise in providing car finance agreements for people with limited credit history or poor credit scores. We’re proud to have helped thousands of people up and down the UK onto a better road ahead.

Use our online finance calculator tool to find out what your agreement could look like based on how much you want to borrow and for how long. Then, when you’re ready, get a quote and see if we could help you onto a better road ahead.

FAQs about getting car finance on a Debt Management Plan

Yes, if you’ve had a Debt Management Plan (DMP) in the last 6 years, it will show up when prospective lenders carry out a credit check on your credit file. Some creditors may also ask for a note to be put on your file to say that you have a DMP, and this may remain there for a time after your DMP has ended.

If you’re already in a car finance agreement and want to get a Debt Management Plan to help you manage the repayments, you may still be able to keep your vehicle. It depends on your personal circumstances, and the terms of your DMP. It’s best to speak with your DMP provider, as they’ll be able to explain your options.

You can apply for a car finance agreement both during and after a Debt Management Plan. Having a DMP doesn’t necessarily mean you won’t be able to borrow money; it just might mean that you need to use a specialist lender.

If you have used a DMP provider to settle outstanding debt, you can still follow the same steps to rebuild your credit score as individuals who haven’t been on a DMP. These include:

  • Making any regular payments on time and in full
  • Not exceeding or getting close to your credit limit on any credit accounts
  • Registering for the electoral roll, if you haven’t already
  • Avoiding excessive applications for credit within a short space of time
  • Using a credit-building credit card

For more information, read our comprehensive guide on how to improve your credit score.

It’s important to remember, though, that the cost of owning or being the registered keeper of a vehicle isn’t limited to the monthly repayments you’ll be expected to make to your finance provider. You’ll also need to factor in additional expenses such as insurance, road tax, annual servicing and MOTs, and breakdown cover, amongst other things.

How does a Debt Management Plan affect your credit score?

Having a Debt Management Plan can impact your credit score. This is because your payments will be lower than the amount you originally agreed to repay each month when first taking out the loan or entering into the finance agreement.

Whilst being on a DMP can have a negative impact on your credit score, so too will any late or missed payments. In fact, Experian have said that, in some situations, getting a DMP to manage debt can have less of an effect than falling into more serious difficulties with lenders.

If you’re worried about your credit report or what a bad credit score might mean for your eligibility, you can learn more by reading our full guides on what affects your credit score and how to check your credit score.

Car finance with Moneybarn

If you have a Debt Management Plan or a bad credit history, getting approved for car finance can be more difficult.

We carry out thorough credit and affordability checks on all finance applications we receive, regardless of whether you are on a DMP or not. If your credit file and financial profile fit our lending criteria, we might be able to provide you with the car finance agreement you need.

We specialise in providing car finance agreements for people with limited credit history or poor credit scores. We’re proud to have helped thousands of people up and down the UK onto a better road ahead.

Use our online finance calculator tool to find out what your agreement could look like based on how much you want to borrow and for how long. Then, when you’re ready, get a quote and see if we could help you onto a better road ahead.

FAQs about getting car finance on a Debt Management Plan

Yes, if you’ve had a Debt Management Plan (DMP) in the last 6 years, it will show up when prospective lenders carry out a credit check on your credit file. Some creditors may also ask for a note to be put on your file to say that you have a DMP, and this may remain there for a time after your DMP has ended.

If you’re already in a car finance agreement and want to get a Debt Management Plan to help you manage the repayments, you may still be able to keep your vehicle. It depends on your personal circumstances, and the terms of your DMP. It’s best to speak with your DMP provider, as they’ll be able to explain your options.

You can apply for a car finance agreement both during and after a Debt Management Plan. Having a DMP doesn’t necessarily mean you won’t be able to borrow money; it just might mean that you need to use a specialist lender.

If you have used a DMP provider to settle outstanding debt, you can still follow the same steps to rebuild your credit score as individuals who haven’t been on a DMP. These include:

  • Making any regular payments on time and in full
  • Not exceeding or getting close to your credit limit on any credit accounts
  • Registering for the electoral roll, if you haven’t already
  • Avoiding excessive applications for credit within a short space of time
  • Using a credit-building credit card

For more information, read our comprehensive guide on how to improve your credit score.

 
Daniel Timblick, Senior Credit Risk Analyst
Bringing you guides that simplify the world of credit and answer common vehicle finance questions.
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