Buying a car when you have a debt management plan

If you want to take out credit - such as car finance or a personal loan - so that you can buy a vehicle, it’s a good idea to speak to your DMP provider first. 

You don’t need their permission to borrow as a DMP is an informal arrangement, but they’ll be able to run through your budget and see how it would affect your plan.

Unless you can free up money from other areas of your budget, borrowing to buy a car might mean having to reduce your monthly DMP payment. It would then take you longer to pay off your debts.

It may even mean you wouldn’t have enough disposable income to make a monthly DMP payment to all your creditors. You would then have to try and find another way to deal with your debts. 

Before going ahead and taking out credit to buy a car, ask yourself:

Do I really need a car?

Could you manage without a car while you finish paying off your DMP? If you have health problems, or poor public transport links in your area mean you’d struggle to get to work, you might have no option but to buy a vehicle. But if you can get by until your finances are back on an even keel, it might be worth waiting.

Have I factored in all the costs? 

Remember, it isn’t just the monthly credit repayments you need to cover. There are a range of other costs car owners face, including insurance, road tax, vehicle maintenance, fuel, parking etc. Compare this with what you’d spend on things like public transport and taxis if you didn’t buy a car.

If you’ve decided that you need a car, you’ll no doubt be keen to keep costs to a minimum. There are a number of ways you might be able to save yourself some money.

Buying a car

To get the best deal when buying a car:

• do your research so you know what a good deal looks like
• be prepared to haggle
• start by offering less than you’re prepared to pay
• don’t reveal the maximum you’re prepared to pay
• don’t exceed your limit – walk away if the deal’s not right
• shop around for the best car finance deals
  
  

Running a car

To keep your running costs down:

• shop around for insurance
• you might be able to reduce your insurance costs by getting a black box fitted or adding a safe and experienced driver to your policy
• some supermarkets will reward you for filling up at their fuel stations 
• carry out regular maintenance, e.g. checking tyre pressure and changing the oil, to avoid expensive repairs down the line

If you come into a lump sum of money, speak to your DMP provider before using it to buy a car. 

They’ll talk you through whether it would be better used to reduce or even settle your debts.