Can I get car finance after declaring bankruptcy?

Can I get car finance after declaring bankruptcy? 

Facing bankruptcy is an incredibly stressful time, and the uncertainty can feel overwhelming. Relying on your car for work, the school run, or simply for your independence, means that it can be worrying if bankruptcy happens because, put simply, what if you can never get finance again?

The good news is that declaring bankruptcy, literally, doesn't mean the end of the road. While it does significantly impact your credit file, options are always available to get you back to financial health. 

Here, we'll break down what happens to a car on finance during bankruptcy and explain the steps you can take to secure car finance after bankruptcy.

What happens to my car on finance after bankruptcy? 

When you declare bankruptcy, your finances are handled by an Official Receiver (OR). Their job is to manage your assets and decide what payments you can make towards your debts. As your car is an asset, what happens next depends on its value rather than the amount of finance you have left to pay. Whether you can keep your financed car if you file bankruptcy all depends on equity. 

Positive equity ✅

If you have positive equity, that means your car is worth more than the outstanding balance on your finance agreement. For example, if your car is valued at £8,000 and you only have £5,000 left to pay, there is £3,000 of positive equity. In this situation, the OR will see the car as an asset that can be sold to pay off your debts. 

Negative equity ❌

As for negative equity, that's the opposite situation: you owe more on the finance agreement than the car is worth. If you owe £8,000, but the car is worth £6,000, there is no financial benefit for the OR to take and sell the car on your behalf. 

Getting car finance after bankruptcy: is it possible? 

Can you get car finance after bankruptcy? Absolutely. However, it's important to be realistic and not put too much financial pressure on yourself - whether that's now or in the future. A high-street bank or mainstream lender will most likely reject your application as their automated systems raise red flags for those with a history of bankruptcy. 

This is where specialist lenders come in, though. Companies like First Response Finance focus on providing car finance for bankrupts because we understand that your past doesn't define your present. We look beyond the credit score to assess your current affordability and your ability to manage payments now, looking to your future and moving forward.

Find specialist car finance for ex-bankrupts in the UK 

The key is to look for lenders who want to help. We have helped many people who have been through bankruptcy to get back on the road. We believe in looking at your current situation and treating you as an individual. We don't believe a past mistake should prevent you from getting the vehicle you need for you, your family, or your job. 

Your step-by-step guide to applying for car finance for bankrupts in the UK 

The process of bankruptcy and financing a car may seem daunting, but it can be straightforward: 

• Confirm your discharge: make sure you have the official paperwork confirming your bankruptcy has been discharged. If you have cooperated with the OR, this usually happens 12 months after the bankruptcy order was made. 
• Check your credit file: get a copy of your credit report and check that all the information relating to your bankruptcy is accurate and up to date.
• Save a deposit: if you can do so, having a deposit, even if small, shows lenders you are in a more stable position and can reduce your monthly payments. While not always necessary, it can only help. 
• Gather your documents: get your recent payslips, bank statements and proof of address ready. This will speed up the application process for your bankrupt car finance. 
• Apply with a trusted specialist: choose a lender that has a proven track record of helping people in your situation. 

Taking small steps to rebuild your credit will also help to improve your chances of being approved. Simple things like registering on the electoral roll, managing your bills and payments on time, and avoiding multiple credit applications will all benefit your credit score.

Remember: lenders who specialise in bankruptcy car finance have seen it all before. Being upfront about your circumstances helps build trust.