Can I get a car when I’m in debt?

posted by in Living with debt

Disclaimer: If you’re currently on a debt solution you may be breaking the terms of your agreement by taking out new credit. You should call your debt solution provider first to discuss any additional credit that you might be considering.

When you’re living with debt it’s important to keep your transport costs under control. But what if your car breaks down? What if you need one for work? Or you want a second car for your family? Can you buy a car? It’s something we get asked every day. 

Because everyone’s situation is different there’s no easy answer to this question. You can buy a car when you’re in debt but we recommend that you consider the following first…

Can I get a car when I'm in debt

Why do you need a car?

Firstly, is it essential that you buy a car? It might be if you need a car to continue working, or for health reasons. It might not be essential if you’d like to upgrade to the latest model, to buy one for your partner, or for weekends away.

Think about whether you really need to buy a car or if you can manage using public transport. If it’s essential for you, follow these steps.

Calculate the purchase cost

Buying a car can be expensive. From buying one outright, on hire purchase, or getting a loan, they’re one of the biggest purchases we ever make.

Can you afford to buy a car outright? Or, if you use credit to buy the car, can you afford to make the monthly payments? You may find that if you have a poor credit rating you’ll be charged a higher rate of interest on any new credit.

It’s also worth bearing in mind that by taking on extra credit, it may take you longer to repay your debts.

Top tip: If you haven’t already made a monthly budget you should do this now to get a full picture of your finances and the affordability of buying a car.

Calculate the running costs of a care

Calculate the running costs of a car

It’s easy to forget just how expensive cars can be to run. It’s a good idea to calculate the yearly costs for:

  • Road tax
  • Insurance
  • MOT
  • Petrol, diesel or electricity
  • Parking

Taking into account your car’s fuel consumption and your lifestyle.

How will a car will affect your budget?

When you add in the purchase and running costs of a car how does it affect it?

If you’re simply replacing an old car, your costs may not have changed. But, if you’ve not had one before it may have a big effect on your budget. There are many ways it might change your budget:

  • You may have reduced your costs, and can pay more towards your debts
  • You may have increased your costs, and need to make smaller debt repayments
  • You may have increased your costs a lot, and can no longer afford your debt payments

Get individual debt advice

We understand that everyone is different and there may be a good reason why you need to purchase a car when you’re in debt.

If it’s essential and is going to affect your budget negatively, you should get debt advice. You can do this online or over the phone. During your advice session you’ll create a budget, and look at your finances in detail to see if there’s a debt solution that’s suitable for you.

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Rebecca Drury is the latest addition to the MoneyAware team joining in November 2016, with a background in ecommerce and social media management. She enjoys live music, travel (especially trying local delicacies) and loves reading vintage sci-fi novels. She's an excellent dancer and loves researching money-saving tips.

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Tags Living with debt