Bankruptcy – Can You Get Car Finance After Bankruptcy?

Bankruptcy is a legal way to help people who cannot pay back their debts. If you are declared bankrupt, the court puts restrictions on your finances, and a government official (called the official receiver) takes control of your money and belongings. This can include your home, car, savings, and any income that is more than you need for basic living costs.

Bankruptcy normally lasts for 12 months. After that, you are ‘discharged’, which means most of your debts are cleared. But the record of your bankruptcy will stay on your credit report for six years. This can make it harder to get loans, credit cards, or car finance in the future.

Should You Choose Bankruptcy?

Bankruptcy is often seen as a last resort. It may not be the right option for everyone. If your belongings are worth more than your debts, or if you are keeping up with payments, there could be better solutions. Other options might include a Debt Management Plan or an Individual Voluntary Arrangement (IVA).

For example, an IVA allows you to pay back a portion of your debt each month over a fixed period, usually five or six years. A Debt Management Plan is less formal and involves arranging lower monthly payments with your creditors. These alternatives may protect your assets, like your home or car, whereas bankruptcy could mean losing them.

It’s a good idea to speak to a free and trusted advice service first. StepChange Debt Charity can help you look at your full situation and talk through all your options before you decide. Advice services can also explain the long-term effects bankruptcy will have on your credit score and borrowing options.

Can You Keep Your Car If You Go Bankrupt?

It depends on your situation. A car is seen as something of value, so it could be sold to help pay your debts. But if your car is essential — for example, you need it to get to work, take your children to school, or care for someone — the official receiver may let you keep it.

According to the GOV.UK Guide to Bankruptcy, decisions are made on a case-by-case basis. If your car is worth more than £1,500, you might need to sell it and buy a cheaper one, using the rest of the money to pay off debts.

If your car is under finance (like hire purchase), the finance company has the right to take the car back if you are declared bankrupt. Under the terms of our Hire Purchase Agreement (HPA), the vehicle must be returned in cases of bankruptcy. This applies even if you rely on the car for work, school runs, or caring responsibilities. It is always best to check your finance agreement carefully so you understand what will happen in your situation.

Can You Get Car Finance While You’re Bankrupt?

If you’re bankrupt, getting car finance is very unlikely. Bankruptcy lowers your credit score and makes lenders see you as risky. Because of this, most banks and finance companies will turn down your application.

UK law says you must tell a lender if you want to borrow more than £500 while you are bankrupt. Most lenders will check your credit report and will see the bankruptcy on your file.

If you apply for finance without telling the truth about your bankruptcy, you could be breaking the law. While you are still bankrupt, your options for borrowing are very limited. In most cases, people need to wait until their bankruptcy has finished before applying for car finance.

Can You Get Car Finance After Bankruptcy Is Discharged?

Yes — once your bankruptcy has ended, you can apply for car finance. After the 12-month period, your financial restrictions are lifted. But the bankruptcy still appears on your credit file for six years, and this can affect your chances of being approved.

Some lenders will wait until your credit file no longer shows the bankruptcy. Others, especially those who help people with poor credit, may be more flexible. They might look at your income, how you manage your money now, and whether you can afford the payments — not just your past mistakes.

It’s worth noting that lenders who specialise in bad credit car finance may charge higher interest rates. This is because they see lending to someone with a history of bankruptcy as a bigger risk. However, if you make your payments on time, it could help rebuild your credit rating over time.

Ways to Boost Your Chances of Approval

• Wait until you are fully discharged before applying for finance.
• Check your credit report to make sure it shows your bankruptcy as discharged.
• Register on the electoral roll so lenders can confirm your address and identity.
• Keep paying any bills or credit agreements on time to build trust with lenders.
• Save for a deposit. A bigger deposit means you may need to borrow less, which helps show you’re serious.

You could also consider applying with a joint applicant or guarantor. This is someone with a stronger credit history who agrees to cover the repayments if you cannot. Having this support may increase your chances of being approved, though not all lenders accept guarantor agreements.

Even if some lenders say no, others may be more understanding. Choosing a realistic loan amount and a car that fits your budget can also help you get approved. It’s important to be honest about what you can afford, as overstretching yourself could lead to further financial problems.

Go Car Credit’s Approach to Bankruptcy

At Go Car Credit, we know that people’s situations can change. We believe that past problems don’t always reflect your ability to manage money today. That’s why we look at the full picture, not just your credit file.

We do not offer car finance to people who are currently bankrupt. But if your bankruptcy has ended and you have been discharged, we may be able to help you move forward.

We look at your income, how affordable the loan would be for you, and whether it’s the right time for you to borrow. We always lend responsibly and aim to support our customers in making good financial choices.

For example, if you can show that you have kept up with rent, utilities, or other essential bills since your bankruptcy, this may work in your favour. Demonstrating stability can be as important as your credit score when applying for finance.

To learn more, visit our Bad Credit Car Loans page. It explains how we could support customers with a history of credit issues.

How to Check If You’re Eligible

If you’ve been discharged and want to see if you might be approved, try our eligibility checker. It’s quick and easy to use, and it won’t affect your credit score. The checker gives you a clear idea of whether you are likely to be accepted before you make a full application.

Each time you apply, it shows up on your credit report. If you apply too often, your score can drop. Checking your eligibility first helps you see your chances without hurting your score.

Once you know where you stand, you can decide whether to apply right away or wait a little longer while you work on improving your credit history. Some people choose to spend a few extra months building up savings, reducing existing debts, or showing consistent bill payments before applying.

Final Thoughts

Bankruptcy is a serious step that has lasting effects on your finances, but it does not mean you will never be able to get car finance again. While you are bankrupt, your options are very limited. After discharge, specialist lenders may be able to help you move forward, even if mainstream lenders say no.

Be realistic and only borrow what you can afford. With good money habits, your credit can get better over time, giving you more options. You can get car finance after bankruptcy — but it takes time and support.