Car finance during or after a trust deed

You are not legally barred from getting car finance during or after a trust deed, but it is usually harder, and any new finance is yours alone to repay. During a trust deed, mygov.scot says new credit may affect your ability to keep up your payments and cannot be included in the trust deed, so speak to your trustee before applying. After it ends, the trust deed stays on your credit file for 6 years from the date it began, and each lender decides for itself whether to lend.

If you already have a car, or a car on finance, when you sign a trust deed, see your car and a trust deed. This page is about taking out new finance.

Can you get car finance during a trust deed?

You can apply, but there are three things to know first.

New debts are not covered. mygov.scot says that if you take on new debts after signing, you cannot include them in the trust deed, and you will not be protected from legal action by those new creditors. They are not written off when you are discharged either.

Your trustee needs to know. Your trustee is the licensed insolvency practitioner who runs your trust deed. Your payment is the whole of your surplus income, worked out with the Common Financial Tool, the set method used across Scotland to work out what you can afford. A new monthly finance payment changes that budget. AiB’s guidance on the tool says hire purchase or conditional sale payments may be allowed as essential spending if the item is essential and the payments are reasonable, and gives a car that is your only way of getting to work as an example. Whether a new agreement would be allowed is for your trustee to decide, so ask before you sign anything, and check your trust deed’s terms.

What you buy can matter. The trust deed covers money or property you acquire in the 4 years after you sign. A car you buy outright during that time could be treated as part of what goes to your creditors, depending on its value and your need for it. If you want to part-exchange your current car, remember it may already form part of the trust estate, so do not sell, swap or scrap it without your trustee’s agreement.

What will a lender look at?

Any lender that checks your credit file will see your trust deed while it is recorded there. Your trustee must have warned you before you signed that a trust deed may lead to you being refused credit, both during the trust deed and after your discharge.

Lenders must make a reasonable assessment of whether you can afford to repay before lending, under the FCA’s creditworthiness rules in CONC 5.2A. That includes the risk to you of not being able to keep up the payments. Citizens Advice Scotland explains that lenders score applications differently, and that if your score is below a lender’s threshold it may refuse you or charge you more. So an offer you do get may cost more than finance offered to someone with a clean record. Answer any questions about past debts honestly.

Can you get car finance after a trust deed?

Once you have been discharged, the debts included in your trust deed that were left are written off (apart from debts that are never written off, such as student loans), and new borrowing is no longer affected by the trust deed’s terms. Your records clear in two stages:

For a trust deed that ran for the standard 48 months, that means the credit file entry usually shows for around two more years after your payments ended.

Before you apply:

• get your free statutory credit reports from Equifax, Experian and TransUnion, and check your discharged debts are shown correctly. See rebuilding your credit after a trust deed
• keep your discharge certificate in case a lender asks about the trust deed
• avoid lots of applications at once. Citizens Advice Scotland says each one leaves a trail on your file that may affect your score
• check the firm is authorised. Car finance lenders and brokers should be authorised by the Financial Conduct Authority (FCA). You can check on the FCA Financial Services Register
• work out the total cost, not just the monthly payment, and whether you could still afford it if your circumstances changed

How does hire purchase work?

Hire purchase (HP) is a common way to finance a car. Citizens Advice Scotland explains that:

• you do not own the car until you have paid in full, and you must not sell it without the lender’s permission
• you can end the agreement in writing and return the car at any time. If you have already paid more than half the total price, you usually will not have to pay any more
• if you fall behind, the lender may be able to take the car back, usually with a court order

Conditional sale works in a similar way. Whatever the type of agreement, read it carefully and ask the lender to explain anything you are unsure about, including any final payment.

What if you are owed compensation over past car finance?

The FCA set up a compensation scheme for some car finance agreements, but in July 2026 it said parts of the scheme had been suspended while legal challenges are heard. It says you can complain to your lender directly, for free, and that you do not need to use a law firm or claims management company, which may take a large share of any compensation.

If you are in a trust deed, or thinking about one, tell your trustee or the insolvency practitioner about any claim, and ask how a payout would be treated. Money you are owed can form part of what goes to your creditors. See windfalls and inheritance in a trust deed.

How do other options compare?

Borrowing rules differ between Scotland’s debt solutions. In a debt payment programme under the Debt Arrangement Scheme (DAS), credit over £2,000 needs AiB’s approval, and you do not have to sell your car. In sequestration (bankruptcy in Scotland), there are legal limits on borrowing £2,000 or more without telling the lender you are bankrupt. That legal limit does not apply to trust deeds, although the points above about new debts still do. A trust deed also has fees, affects your credit rating for 6 years, puts your name on the public Register of Insolvencies, may mean releasing equity in your home and cannot include every debt. If it fails, creditors can pursue you again and your trustee can petition for your sequestration.

If you are relying on a car and struggling with debt, an adviser needs to look at your whole situation before any option is chosen. Free, impartial advice is available from the services in free debt advice in Scotland.

Official sources

• mygov.scot: how a trust deed could affect you
• AiB Notes for Guidance, Common Financial Tool, section 6: essential spending, including hire purchase
• Citizens Advice Scotland: hire purchase and conditional sale
• Citizens Advice Scotland: how lenders decide whether to give you credit
• FCA: motor finance scheme partially suspended (2 July 2026)