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How do you pay for a car repair during an IVA

How do you pay for a car repair during an IVA

How do you pay for a car repair during an IVA

You will normally have a car repair bill at least once a year during your IVA. But when you have no spare cash, how will you pay for it?

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Can you add a budget for car repairs in your living expenses?

Make sure you include a reasonable car repair allowance in your living expenses budget. Remember, the budget is not just for repairs. It also has to cover costs like buying new tyres and paying for an annual service and MOT.

But what is amount reasonable to include? The answer to this is, it depends. For example the age and type of your car and how much you use it will have a huge affect on the amount it costs to keep on the road.

As a rule of thumb, an average car which is 3-5 years old will probably cost around £350/year (£30/mth) to service and repair. A car which is 5-10 years old will cost more. Perhaps £450-£500/year (£35-£40/mth). You may need to budget for even more if you have a long commute or drive a lot for other reasons meaning there is greater wear and tear on your vehicle.

One way to try and gauge your budget is to review what your car repair bills have looked like over the last couple of years. Take an average and then divide by 12 to get a monthly figure. As long as you can justify the amount, it should be accepted by your IVA company and creditors.

Make sure you save the amount you budget for car repairs every month. That way the funds will be available when you need them.

Is it possible to get a loan to pay for a car repair?

What can you do if you get an unexpectedly large car repair bill? Perhaps it is more than you have budgeted for or the bill is normal but you have simply not had time to save enough to pay for it.

Unless family or friends are able to help, getting a loan to cover the cost is an option. But it is not likely to be easy as there are not many options available.

You might be able to get a short term cash loan from the likes of a payday lender. But then, you are likely to struggle with the repayments and put your IVA at risk. Normally, the only way round this is to coincide taking the loan with an  IVA payment break. This would then give you time to repay the extra money borrowed, but does require agreement from your IVA company.

Technically speaking, you are not allowed to borrow more money without first getting the agreement of your IVA company. If you do and then get into trouble, they are unlikely to help you and may even threaten to cancel the whole Arrangement

Consider repaying a short term loan by taking a payment break. This has to be agreed in advance.

Are you allowed buy a replacement car during an IVA?

Your car may be beyond repair. Perhaps the repair bill you are facing is more than the car is worth. It would therefore be better to sell (or scrap) your vehicle and get a replacement.

You are allowed to do this during your IVA. But, of course, the challenge is paying for the new vehicle. A loan from a family member repayable after your IVA is completed would be ideal. But this is rarely available.

Depending on your ability to make the required monthly payment, it might be possible to get car finance. There are specialist sub prime lenders who might help. However before going ahead with such a deal you will need the agreement of your IVA company. They will often agree if the finance payment is affordable if the alternative is failing your Arrangement because you are unable to get to work.

Before taking car finance, ensure you will still have sufficient surplus income to maintain your IVA payment after adding the new payment to your living expenses budget.

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