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This amazing offer is open to anyone who has secured car finance with us throughout 2023, including Decemeber 2023!

This means that there's still time to enter, get your finance in December, and you're automatically in!

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Bankruptcy and car finance explained

Considering car finance but been bankrupt in the past? Read on to find out more about the options available if you’re currently in bankruptcy or had a bankruptcy discharged

Written by Verity Hogan
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Are you looking for bankruptcy car financing? If you are, you've come to the right place! Having a bad credit history or finding yourself in debt is never easy, but at CarFinance 247, we believe that everybody should have the opportunity to drive a car, regardless of their financial situation.

Bankruptcy can be a scary proposition to find yourself in, but there's a good chance that we'll be able to find an affordable car finance deal for you. Whilst we can't guarantee car finance, we promise to do everything we can to get you a suitable loan from our broad panel of lenders.

Read on to find out more about the options available if you’re currently in bankruptcy or have had a bankruptcy discharged recently.

However, if you'd like to see what your auto loan options are, please click the 'Get my quote' button. Alternatively, our team will be happy to help - please contact us here to find out more.


What is bankruptcy?

Bankruptcy is a form of insolvency that usually lasts for around a year. It’s typically an option for people who are experiencing serious financial difficulties and are no longer able to pay their debts. Declaring bankruptcy is a big decision that can affect your financial future, including your ability to secure a car finance loan. This means that bankruptcy is often a last resort, as it can have a major impact on your financial situation.

If you're in debt or you have a poor credit history, you may want to consider researching other options first, such as:

However, in some cases, bankruptcy may be the best option if you're looking for a fresh start. You should speak to a licensed financial advisor before committing, as they should be able to advise you of the right option for your needs.

Can I get car finance during bankruptcy?

During the time that you’re declared bankrupt, it’s highly unlikely that you’ll be able to secure any type of car finance. Most lenders will refuse to offer loans to bankrupt applicants and you are legally required to disclose your bankrupt status to prospective lenders if you need to borrow more than £500.

Your receiver may also put restrictions in place that prevent you from applying for a personal loan. If you’re found in breach of these restrictions, you may be at risk of receiving a court order and your bankruptcy discharge could be suspended.

If that sounds like a lot of doom and gloom, it may be helpful to remember that bankruptcy doesn’t last forever. If you follow your restrictions and find that you get your bankrupt status officially discharged, you can take steps to improve your credit score and find a car finance loan that’s suitable for you and your circumstances.

The good news is that bankruptcy usually only lasts for one year, so you should be able to secure an affordable car loan after the period has ended. However, a mark will be left on your credit report for six years, which could reduce the number of deals available to you. We can still provide car finance deals for people with bad credit, so a poor credit score isn’t necessarily the end of the road.

If you'd like to see whether you're eligible for a car loan, you can get a quote from us here.

Can I get car finance after my bankruptcy has been discharged?  

Bankruptcy usually lasts for a year - once it’s been discharged, you’re free to start applying for different types of finance, including car loans. However, as your bankruptcy status will remain listed on your credit report for up to six years, prospective lenders will be aware that you’ve had financial problems in the past and have been unable to keep up with your repayments. This means you could pose a higher risk as a borrower, and lenders could be reluctant to approve a new loan for you.

Despite this, it’s not impossible to get car finance after bankruptcy. Some lenders specialise in offering car finance to people with bad credit, including those who have had CCJs, been in an IVA, or been bankrupt in the past. You may need to agree to pay a higher rate of interest or face restrictions on the amount you can borrow to qualify, but you should still be able to find an affordable car loan.

You can also take steps to improve your credit score after bankruptcy. Depending on your circumstances, if you can live without a new car for a while, delaying your finance application until some time has passed and you’ve rebuilt your credit could increase your chances of finding approval later down the line. 

For example, you can apply for a credit builder credit card. However, it’s important to ensure you never overspend beyond your means, as this could hurt your credit rating further.

How does bankruptcy affect my credit score?

There’s no sugar-coating it - bankruptcy will have an impact on your credit score. And not only will it affect your score during your bankruptcy period, but it will also stay on your credit report for up to six years. If your bankruptcy is never discharged, you could even find that it will remain on your report indefinitely. 

When you declare yourself bankrupt, your name will also be listed on the Individual Insolvency Register, which is available publicly online.

When your bankruptcy has been discharged and you start looking to take out new types of loan (including car finance) prospective lenders may ask you about your bankruptcy. To apply for car finance, you will also need to have your credit score checked. It’s also worth keeping in mind that it could take some time for your credit score to recover, so you may want to consider waiting before making an application.

If you’d like to see what your current credit score looks like, you can conduct a free credit check through Clearscore here.

How can I improve my credit score after bankruptcy?

Credit scores aren’t an exact science, and they can be affected by a range of different factors. However, there are a few steps you can take that can help to boost your score over time after bankruptcy: 

  • Pay your bills on time - Whilst missing your monthly payments is sometimes unavoidable, just one delay could have a negative impact on your credit score. Try to reduce the chances of paying late by setting up an automatic direct debit.

  • Check your credit report – There are several services that allow you to check your credit score for free in the UK. This is a great habit to adopt as it helps you spot mistakes quickly. If you notice something on your report that doesn’t look right, challenge it with the relevant credit reference agency as soon as possible.

  • Improve your credit ratio – Maxing out your credit cards and using your entire overdraft every month probably won’t improve your score. Instead, using a smaller percentage of the total credit available can help demonstrate that you’re a responsible borrower. For this reason, consider keeping your existing credit cards open if you pay off the balance every month.

  • Get on the electoral roll – You can register online for free in minutes. Make sure you register each time you move house so that your credit profile is up to date.

  • Limit new credit applications – Each time you apply for credit, a hard search will be carried out and this is marked on your credit report. Too many hard searches in a short period of time can concern lenders as they may worry that you’re relying on credit too much.

  • Check your linked accounts – If you’ve taken out any form of finance with another person, such as a joint credit card or mortgage, your credit profiles will now be linked, and their financial behaviour could affect your credit score. Keep this in mind whenever you’re thinking about taking out a new joint loan.

By following these steps, you should be able to improve your bad credit score, which will make it much easier to find an affordable car loan.

Can I get bad credit car finance?

Yes, if you have bad credit for any reason (including a past bankruptcy), you may be able to secure a car loan - even if you’ve been refused elsewhere. 

At CarFinance 247, we understand that credit scores come in all shapes and sizes and sometimes your credit score needs some work. But having poor credit doesn’t mean you need to give up on car finance, especially if you need a new car. While we can’t guarantee that we’ll be able to find you an approval, we consider every application individually and our panel of lenders takes a range of factors into account.

To see whether you could be eligible for a deal, please click the ‘Get my quote’ button on our homepage.

Discover the perfect auto loan with CarFinance 247

Bankruptcy car financing may seem impossible at first if you’ve been discharged recently. However, being declared bankrupt in the past does not need to affect your future, particularly if you’ve made a start on building up your credit score.

It may be harder to find a suitable deal and we can’t guarantee finance. However, at CarFinance 247, we have a broad panel of lenders - some of whom specialise in bad credit car finance. There’s still a good chance that you may be able to find an affordable car loan, and we’re here to try and make your driving dreams possible.

It’s easy enough to get started - all you need to do is request a quote on our homepage and we’ll get the ball rolling. If you feel that you need a little more advice first, our friendly team will be happy to help.

Verity Hogan

* The UK's largest online car finance broker by unique users to the website. Based on Similar Web data – 1,137,647 to CarFinance 247 vs. 753,819 for nearest competitor. January to June 2023.

CarFinance 247 is a trading name of CarFinance 247 Limited. Registered office: Universal Square, Devonshire Street North, Manchester, M12 6JH. Registered in England. (Registration Number 06035525).

CarFinance 247 is authorised and regulated by the Financial Conduct Authority for insurance distribution and credit broking (Firm Reference Number: 653019). CarFinance 247 is registered with the ICO (Registration Number Z1897658).

Finance is subject to status and is only available to UK residents aged 18 and over. Written quotations are available on request.

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