My car and my DMP

Cars are expensive. There are some things to think about if you are looking at or already have one.

You need to control your spending while on a debt management plan (DMP). Cars have costs on top of the buying price and fuel.

Costs for keeping a car on the road

• Road tax
• Insurance
• MOT
• Petrol, diesel or electricity
• Parking
• Additional vehicle warranty
• Maintenance costs, such as repairs and replacement tyres

Working out what you need to spend on Road tax and MOTs

You usually pay Road tax and MOT on a yearly basis. But you can pay Road tax every month if that works for you.

To know how much to set aside:

1. Look at your budget
2. Find the yearly car costs like MOT and tax
3. Divide those by 12 to work out the monthly amount
4. Set that amount aside each month

Get in touch with us if covering these costs will leave you short.

Buying a new car

There is no rule saying you cannot buy a car during a DMP.

But: Check with your DMP provider before taking out credit to buy a car. It could affect your plan.

Before buying a car:

1. Check the interest on any loan, hire purchase or car finance you may need
2. Make sure you can afford all the running costs
3. Update your budget with these costs
4. Set aside money to cover them

When you find a car, you need to make sure:

• The seller can be trusted
• There are no parking fines for the car
• It has not been reported stolen

You could also run a check to see if it is linked to any:

• Unpaid finance, or
• Debts

You usually have to pay for this.

Is a car right for me?

You might be better off with a car if:

• You live in a rural area with poor bus or train links
• You live a long way from work
• You have children living at home
• You have health problems
• You are a carer
• People who cannot drive need to visit you a lot

A car is less useful if you have shops close by and easy transport links.

Look at:

• What you need the car for
• What you spend on:
• Trains
• Trams
• Buses
• How much you would spend owning a car
• How much you would save owning a car

This should show you if a car is right for you.

I can afford to buy a car now. Is my DMP still right for me?

A DMP is a good plan when you cannot make the minimum payments on debts. If you can afford to buy a car, you might be able to do more to pay off your debts.

Get in touch with your plan provider.

The terms of your DMP may state that any extra income needs to go towards paying off your debt.

Buying a car may be considered unfair to your creditors.

Have more money now? You may be able to make a full and final settlement.