Car leasing on a debt management plan

£299 to £399

a month, inc VAT

3 months

rental up front

36 months

road tax included

10,000

miles a year

• You do not need permission from anyone. There is no Insolvency Practitioner and no court.
• A DMP is not on any public register. What lenders see is the effect of it on your credit file, not the plan itself.
• Most cars are between £299 and £399 a month, and you pay the first three months up front.
• We read your bank statements before any credit check, and your DMP payment is one of the things we are looking at.
• Tell your DMP provider before you commit to anything. This page explains why that matters more than it sounds.

The plan itself is not recorded anywhere. There is no register of people on debt management plans the way there is for IVAs and bankruptcies, and no lender can look you up.

What they see is the effect. If you are paying your creditors less than the contractual amount, those reduced payments get reported. Accounts show as partial payments, or carry an arrangement to pay marker, and it is common for some of them to default along the way. A default sits on your file for six years from the date it was added, whether or not you go on to clear the balance.

So the picture a mainstream leasing company sees is a file with several accounts in some state of arrangement or default. Their model scores that and declines you, and nobody ever tells you it was the shape of the file rather than anything about you.

The awkward truth about a DMP is that it produces a credit file that looks worse than your actual behaviour.

Someone who has kept to a plan for two years has made twenty four payments on time, to a budget, without missing one. That is a better demonstration of reliability than most people with clean files could offer. But the file records the arrangement, not the discipline, so an automated decision reads it as a stream of underpayments and says no.

That gap between what the file says and what you have actually been doing is the whole reason this site exists.

If you have read our page on car leasing with an IVA you will know it involves a permission step. The Insolvency Practitioner has to agree, the lender will not proceed without that agreement, and getting the two into the same room is where most people give up.

A DMP has none of that. It is an informal arrangement. There is no Insolvency Practitioner, nothing legally binding on either side, and no third party whose signature you need. You can leave a DMP whenever you choose.

That makes the process considerably easier. It also removes the safety net that the IVA process gives you, which brings us to the part of this page that matters most.

Every free debt advice charity will tell you not to take on new commitments while you are repaying debts through a plan. They are right, and we are not going to pretend otherwise to sell you something.

The general rule exists because most new commitments are discretionary. A car usually is not. If you cannot get to work without one, and the car you have is failing or its agreement is ending, then going without is not a neutral choice. It is the thing that ends the plan.

The distinction that matters is whether the money is genuinely there. So:

Speak to your DMP provider first. StepChange, PayPlan, whoever administers your plan. Tell them what you are considering and ask them to review your budget with the rental in it. A car needed for work is a normal budget expense and they deal with this regularly.

Do not let the payment quietly come out of theirs. If the only way the rental fits is by reducing what your creditors receive, without telling anyone, that is how DMPs fall apart. It also tends to end with the plan collapsing and you losing the car as well, which leaves you worse off than when you started.

If your provider says the budget does not stretch, believe them. We would rather you came back in a year than took a car you cannot hold on to. We do not make money from an agreement that fails, and you will lose considerably more than we do.

If you do not currently have a plan provider, or you set the arrangement up yourself, StepChange and MoneyHelper are both free and neither will sell you anything.

Your bank statements are read first. Three months of them, plus a copy of your driving licence. Someone at the lender reads them properly and works out whether the payment would sit comfortably alongside everything else that goes out of your account, including your DMP payment. Nothing touches your credit file at this stage, so if the answer is no you lose nothing.

Your plan payment is not a mark against you in that assessment. It is a number, it comes out on the same day each month, and it is easier to work with than most of what appears on a bank statement. What matters is what is left after it.

Around £900 to £1,200 to start. That is the first three months' rental up front. There is no no-deposit version and there never will be.

Income from work. £1,500 a month minimum after tax, and realistically £2,000 is where this starts to work properly. If you are applying as a company, that is the director's income.

Three months of bank statements, full ones, every page, downloaded as PDFs from your banking app rather than photographed.

A copy of your driving licence, front and back.

Your plan payments up to date. Not your original creditors, your plan. If you are behind on the arrangement itself, this will not work today.

Most cars are between £299 and £399 a month, including VAT and road tax. Agreements are typically thirty six months with a ten thousand mile a year limit, and going over costs extra per mile at a rate written into your agreement before you sign.

You will need fully comprehensive insurance, which is not included and is worth pricing before you commit rather than after.

You can see what is available now on the cars page. The list changes regularly.

When we cannot help

Worth saying plainly, because it saves you sending us your bank statements for nothing.

• If you are behind on your DMP payments right now
• If direct debits are bouncing or you are using an unarranged overdraft most months
• If your income is under £1,500 a month after tax, or comes only from benefits
• If you cannot cover the three months up front
• If you drive more than 12,000 miles a year
• If your plan provider has looked at the budget and told you it does not fit

The pattern is the same across everything we do. Past trouble is fine. Current trouble is not, and a plan you are struggling to keep to counts as current.