Securing a Loan Following an IVA: Latest Guidelines

Are you worried about getting a loan after an IVA? You’re not alone. Many people feel the same way, especially with the new 2023 rules.

An IVA can stay on your credit report for 6 years, even when it’s over. This makes getting a loan tricky. But don’t fret; there are ways around this.

Over 170,000 people visit our website to get guidance on debt solutions each month. We’re here to share what we know. We understand your worries, and we want to help you find a way out.

In this article, we’ll explain:

  • Why an IVA can make getting a loan hard.
  • The kind of loan you can get with an IVA.
  • How specialised lenders can help you.
  • If you need a guarantor for a loan after an IVA.
  • Other ways to get a loan after an IVA.

We hope you will find this article helpful on your journey to getting a loan after an IVA. Remember, it might be hard, but it’s not impossible. Let’s dive in.

My IVA has Finished. Why do I Still Need to be Worried About Not Being Able to Get a Loan? 

An IVA is an extremely flexible debt solution which can do a great job of writing off your debt. 

That being said, it does come with its set of disadvantages which you need to be aware of.

One of these disadvantages is the fact that an IVA stays in your credit file for six years. Please note that the IVA stays in your credit file for six years even if your IVA ends in five years or earlier than that. 

So, this means that for six years, youre going to have a lot of trouble securing a loan due to your poor credit score

What Loan Can You Get With an IVA in Place?

You cant really obtain a loan of more than £500 at all when your IVA is in place without the permission of your insolvency practitioner (IP). 

Once your IVA has finished, you dont need to seek permission for your IP but youll find it very hard to get approved for a loan due to the mention of the IVA in your credit file

Its likely that you wont be able to get your application approved if you go to traditional lenders

Thus, youre going to have to get credit from specialised lenders that will be responsive to your loan application even if you have a poor credit score. 

What Other Options Are There for Getting a Loan After an IVA?

Secured Bad Credit Loans:

Secured bad credit loans (such as mortgage loans) typically have lower interest rates and higher amounts of money that you can borrow, compared to unsecured bad credit loans. Again, this is because when it comes to a secured loan, you put up a valuable asset of yours as “collateral”

If you cannot pay back your debt, the asset is seized by your lender and sold off to make up for your debt.

Unsecured Bad Credit Loans:

Unsecured loans dont have any asset secured against them so the lender reduces their risk by either limiting the amount of money you can borrow and/or by charging a higher interest rate. 

When youre looking for a bad credit lender, its highly important that you make sure the lender youre dealing with is authorised and regulated by the Financial Conduct Authority (FCA). 

Waiting it out…

If you’ve had an IVA and are struggling to find a new and affordable loan, I highly recommend potential borrowers wait. 

Its understandable if you need a loan for an emergency purchase. Of course, if your loan cant wait and you have a bad credit rating, then opting for a bad credit lender definitely is the way to go. 

However, if the purchase you need the loan for can wait, then I highly recommend that you wait some months before opting to borrow money. 

So, what will waiting for a few months do for you? Well…

Do You Need a Guarantor to Get a Loan After an IVA?

Some lenders may ask you to produce a guarantor – a person who will agree to make your monthly repayments for you in the case that you are ever unable to.

A guarantor can be anyone whom you trust, such as:

  • A parent
  • A relative
  • A close friend

Keep in mind that your guarantor needs to have a good credit score though. 

Guarantor loans often allow you to secure a much larger amount of money compared to bad credit loans that dont need guarantors. This is because a guarantor reduces the potential risk for the lender. 

How Do Specialised Lenders Work?

Specialised lenders work in a variety of different ways.

Each lender will have a different set of eligibility criteria and conditions that youll have to fulfil in order to qualify for their loans.

For example, bad credit lenders are lenders that wont give much weight to the fact that you have a poor credit score. Instead, they will look at:

  • Your current financial circumstances.
  • Your ability to pay back the loan adequately.

However, you have to keep in mind that bad credit loans often come with strings attached. For example, bad credit lenders often offer much lower loan amounts compared to traditional lenders. 

Furthermore, its also likely that you will not get a competitive interest rate when youre opting for a loan with a bad credit rating. 

Thus, its highly likely that youll end up paying a lot more money than what the original amount you borrowed was.

344 thoughts on “Securing a Loan Following an IVA: Latest Guidelines”

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