Buying a Car While in Debt Review

If you are in debt review and have a court order restructuring your repayments, you’re already taking positive steps to become debt-free, well done! After some time in debt review, you may find yourself in a better financial position and start thinking about new expenses—like upgrading your car.

But is it possible to buy a new car while in debt review?

Let's find out.

Why Debt Review and New Debt Don't Mix

Most people outside debt review rely on debt every month, never fully paying it off. This includes using credit cards for everyday expenses, and upgrading cars before completing payments on the old one. For some, this cycle becomes unmanageable, leading to skipped payments and unpleasant calls from debt collectors. Debt review breaks this pattern by helping you to reduce and eventually clear your debts.

While in debt review, the goal is to pay off what you owe—not to take on more debt. Because of this, you cannot qualify for new credit, including car finance. Even if you feel ready for a new car, credit providers will not approve loans while you are still paying off existing debts. So, if you need transport during debt review, you may need to explore other options.

What Are Your Options?

Since car finance isn’t available under debt review, consider these alternatives:

• Borrow a Vehicle: A family member might lend you a car temporarily. Just be sure to arrange the insurance to avoid complications.
• Car Rentals: While more expensive, renting a car covers maintenance and servicing. This could be an effective short-term solution if you need a vehicle urgently.
• Public Transport or Ridesharing: Services like taxis, buses, or e-hailing apps (such as Uber) may be very cost effective compared to car ownership if you factor in the cost of fuel, maintenance, and insurance.

Note: Please be cautious of anyone offering to "get you out" of debt review so you can buy a car. These scams could undo your progress and leave you in a worse financial position.

Taking Care of Your Car During Debt Review

If you already own a car, it’s essential to maintain it properly during debt review. Ensure it stays insured (as required by credit providers) and take care of regular services, repairs, and tyre replacements. A well-maintained vehicle can last the duration of your debt review, reducing the need for new car finance.

Did you know? If your car is written off in an accident, insurance will pay the remaining amount to your credit provider. However, it won’t automatically replace your car. Talk to your Debt Counsellor about insurance products that can help you stay mobile, if this happens.

Buying a Car After Debt Review

Once you successfully complete debt review and receive your clearance certificate, you can think about using credit again—but wisely this time. If you decide to buy a car, carefully calculate the total costs and ensure you can afford the repayments. If not, renting or using rideshare services may still be better options.

Buying a car is a big financial commitment. During debt review, focus on paying off your current debts. Once you're debt free, you’ll have more freedom to make smart financial decisions, including whether or not to purchase a new car.