Applying for car finance when bankrupt

You can not apply for car finance until you have been discharged from being bankrupt.

Finance applications during an IVA can be accepted, subject to written approval from the scheme administrator.

Once you are discharged from bankruptcy you are legally able to borrow, however it may take a while to improve your credit rating.

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Make sure that all payments are kept up to date as any that aren't can be a huge disadvantage when it comes to applying for credit.

Keep on top of the payments by setting direct debits up for all of your outgoing bills as this will ensure that you never forget to pay.

The longer you can wait between being discharged and making your application the more lenders will consider your application. Especially if there is evidence of

Many lenders will provide previously bankrupt consumers a chance of having their loan application accepted as long as they have a UK driving licence and are currently employed.

One thing to be aware of though when trying to rebuild your credit is to not make an application too early in the process, as the more applications you make for finance or credit, including rejected applications, the more likely you are to have future applications rejected or to be charged higher rates.

When preparing to make an application after rebuilding your credit make sure to find out if the lender will record a "hard" credit application search on your credit record, a "soft" search or a quotation search.

If you are wanting to apply for other credit loans, such as a mortgage or remortgage, make sure to space the applications out and priorities them. If you are applying for a large loan then it would make sense to complete this application first.

For more information on applying for car finance visit the Finance Tips section on the AutoeBid blog.