In Scotland, there is a legal debt relief option called a Trust Deed that enables you to pay off your car finance with manageable monthly payments, with the remaining balance being forgiven at the conclusion of the payback period.
Although a longer duration may be taken into consideration based on your circumstances, it typically lasts for 4 years.
Your monthly finance will be used by a Trustee to pay your creditors. The key advantage of a Trust Deed versus sequestration (bankruptcy) is that you won’t be required to sell your property, even though equity may need to be freed from your assets.
If I Have a Trust Deed, Can I Get Car Finance
When deciding whether or not to enter into a trust deed, people frequently wonder how it would impact their ability to finance an automobile. Accessing any form of financing will be more challenging after entering a Trust Deed, but it’s still feasible.
To receive any type of credit during a Trust Deed, you will need the Trustee’s consent; failing to inform your Trustee would violate the terms of your contract and could cause your Trust Deed to collapse.
Your Trustee will determine the reasonableness of your request for auto financing. They will evaluate your income and expenses to determine whether financing a car is a good idea for you. If the car loan is manageable given your existing financial situation and living expenses, your Trustee is likely to grant your request.
But because a Trust Deed requires you to pay a sizeable portion of your disposable income towards your debts, it’s possible that you won’t have enough money left over each month to cover your auto payments.
Because a Trust Deed is a legal insolvency arrangement, the amount of vehicle finance programs you are eligible for while in one will be significantly reduced. Consequently, a Trust Deed will show up on your credit report, showing potential lenders that you have previously struggled with credit management, making them more wary of you.
There are businesses that specialize in offering loans to borrowers with bad credit or debt management issues. We encourage you to be wary of such businesses because it can be expensive to borrow money when you have a bad credit history. Therefore, it’s crucial that you consider whether or not you actually need a car.
It’s worth attempting to save money to buy a used car if you can live without one for a while by setting up a car finance or using public transportation.
Of course, you might not have a choice because having a car may be necessary for your job and saving up to buy a used car may not be practical. In this case, it’s crucial to compare prices in order to get the greatest offer. You might think about contacting a credit union, which offers community savings and loans.
They are renowned for assisting people who would find it difficult to obtain a loan elsewhere by allowing you to borrow money at cheap interest rates.
Car finance follows your trust deed
Although you will no longer be included on the Insolvency Register once your Trust Deed has been discharged, it will continue to appear on your credit report for a period of six years following the date you signed the Trust Deed. For instance, if your trust deed lasts for 4 years, it will continue to appear on your credit report for the subsequent 2 years.
Your credit score may suffer as a result, which may make it challenging to locate a reliable lender. When thinking about financing a car, waiting until your credit has improved may be a better alternative because you will have access to better offers – as long as you utilize credit responsibly.
The best finance should be found by shopping around and using comparison websites, though, if this is not an option. It can be a good idea to contact a credit union if you are having trouble finding a company prepared to approve your application.
We hope that you can get your car finance through trust deed!