Yes, in most cases you can keep your car in a Trust Deed. If you can show that you genuinely need it, for work, commuting, school runs, or getting around in a rural area, your trustee will usually let you hold on to it for the length of your agreement.

The main things that decide this are how much your car is worth and whether you actually need it day to day. If it falls under the usual value limit (around £3,000) and you can justify the need, it stays with you. If it’s worth more than that, or you’re on car finance, there are a few extra rules to be aware of.

Below, we’ll walk through exactly how the value limit works, what happens if your car is on finance, whether you can get new car finance during your trust deed, and what happens to your car once the agreement ends. 

What Counts as a “Reasonable Need” for a Car?

Your trustee doesn’t just look at whether you’d like to keep your car, they look at whether you actually need it. This is what’s known as a “reasonable need,” and it’s the main factor in deciding if you can hold on to your vehicle during a trust deed.

Common examples of reasonable need include:

• Commuting to work, especially if public transport isn’t practical or available
• Getting your children to school, particularly if timings or distance make walking or public transport difficult
• Living in a rural or remote area, where buses or trains are limited or nonexistent
• Medical appointments or caring responsibilities, where regular travel is required

This applies whether you drive a car, a van, or a motorbike. The vehicle type doesn’t matter as much as the reason you use it.

If you don’t have a clear, practical reason for needing a car, your trustee may ask you to sell it and put the proceeds toward your debts. Being upfront about your situation from the start makes this part of the process much smoother. 

Does the Value of My Car Matter?

Yes, the value of your car plays a big part in whether you can keep it. Most trustees work with a threshold of around £3,000. If your car is worth less than this, and you can show a reasonable need for it, you’ll usually be allowed to keep it without issue.

If your car is worth more than the threshold, your trustee may ask you to take one of the following steps:

• Sell the car and put the proceeds toward your debts
• Trade it in for a cheaper vehicle that falls under the value limit
• Pay the difference in value to your trustee, if you want to keep the car as it is

It’s worth noting that the £3,000 figure is a general guide rather than a fixed rule. Trustees can use some discretion depending on your circumstances, so it’s always best to check with them directly rather than assume.

If your car is on finance, its value is usually based on the equity you hold in it (what it’s worth minus what you still owe), not the full market price. 

Not Sure If Your Car Falls Within the Limit?

Car values aren’t always straightforward, and trustees can apply some discretion depending on your circumstances. If you’re unsure whether your car is likely to be affected, it’s worth getting a clear answer before you commit to anything.

Fill out the form below and one of our advisors will talk you through how your car and other assets would be assessed, based on your actual situation.

What If My Car Is on Finance?

If your car is on hire purchase or a similar finance agreement, it’s treated differently to other debts. Car finance is a form of secured debt, which means it can’t be included in your trust deed. The finance company technically owns the car until you’ve paid it off, so this debt sits outside the agreement.

In practice, this means:

• You keep paying your car finance directly to the lender, separately from your trust deed payments
• Your trustee won’t take over these payments or negotiate them on your behalf
• You need to keep up with repayments to avoid falling behind

If you miss payments, the finance company can still repossess the car, regardless of your trust deed status. This is why it’s important to only commit to a trust deed payment plan you can realistically afford alongside your existing car finance.

If keeping up with both becomes difficult, speak to your trustee early. They may be able to help you review your budget, though they can’t step in to cover finance payments for you. 

What Happens If My Car Gets Repossessed?

If you fall behind on your car finance payments and the car is repossessed, you may still owe money afterward. This happens because the amount the finance company gets from selling the repossessed car often doesn’t cover the full balance left on your agreement. The difference is known as a shortfall debt.

Here’s what typically happens next:

• The finance company calculates the shortfall after selling the repossessed vehicle
• They can pursue you for this remaining balance, as it’s now an unsecured debt
• This shortfall can usually be added to your trust deed, since it’s no longer tied to the car itself

Once the shortfall is included, it’s treated the same as your other unsecured debts, meaning it gets paid off through your regular trust deed payments rather than chased separately.

If this happens during your trust deed, let your trustee know as soon as possible. They’ll need to update your agreement to include the new creditor, and acting quickly helps avoid any separate recovery action from the finance company in the meantime. 

Can I Get New Car Finance During a Trust Deed?

Yes, you can get new car finance during a trust deed, but only with your trustee’s permission. You can’t take out new credit on your own without breaching the terms of your agreement.

Here’s why this matters:

• Trustees monitor your credit use throughout the trust deed to make sure you stick to the agreed terms
• New finance affects your disposable income, since any repayments reduce what’s left for your creditors
• Taking out credit without asking is a breach of your agreement, which can put your trust deed at risk of failing

If you do have a genuine need, such as your current car breaking down and being essential for work, your trustee may approve new finance, provided the repayments fit within your budget. They’ll usually want to see that it’s a necessity, not just a preference.

Before applying for anything, speak to your trustee directly. Getting their sign-off first protects your trust deed and avoids any issues with lenders or creditors further down the line. 

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Does a Trust Deed Affect My Car Insurance?

No, a trust deed doesn’t directly affect your car insurance. You don’t need to disclose your trust deed to your insurer, and it shouldn’t impact your premium or your ability to get cover.

A few things worth knowing:

• Insurers don’t check for trust deeds when calculating your premium, since it’s not a factor they assess like they would credit history for some other products
• Your policy and payments continue as normal, separate from your trust deed
• You still need to keep up with insurance payments, as this is a necessary cost of owning and driving the car

That said, if your circumstances change because of your trust deed, for example if you’re switching to a cheaper car, you’ll need to update your insurer with the new vehicle details as you normally would.

If you’re ever unsure whether something needs to be disclosed, it’s worth checking directly with your insurance provider rather than assuming either way. 

What Happens to My Car When the Trust Deed Ends?

Once your trust deed ends, your car is fully yours again with no restrictions attached. You won’t need to check with a trustee, report anything, or ask permission for decisions about it going forward.

Here’s what changes once you’re discharged:

• Full ownership is restored if your car’s value or use was ever a condition of the agreement
• No more reporting requirements, so you’re free to sell, upgrade, or finance a car without approval
• Your credit rebuilding can begin, and managing your car and any related finance responsibly is a good starting point

If your car was on finance throughout your trust deed, keep in mind that this agreement doesn’t end when your trust deed does. You’ll continue paying it separately until the finance itself is settled in full.

Once you’ve completed your trust deed and received your letter of discharge, that’s the point everything tied to your original agreement, including any conditions around your car, comes to an end.  

Tips for Keeping Your Car During a Trust Deed

The best way to keep your car during a trust deed is to stay open with your trustee and stick to the terms of your agreement. A few simple habits make this much easier to manage.

• Be upfront with your trustee early. Explain why you need your car as soon as possible, ideally when your trust deed is first being set up. This gives your trustee the full picture and avoids any surprises later.
• Keep finance payments current. If your car is on finance, make sure these payments stay separate from your trust deed budget and are paid on time. Falling behind puts you at risk of repossession, regardless of your trust deed status.
• Don’t take on new credit without asking. Always get your trustee’s permission before taking out new car finance or any other credit. Doing this without approval breaches your agreement and could put your trust deed at risk.
• Downsize if your car is over the value limit. If your car is worth more than the usual threshold, consider trading it in for a cheaper model. This keeps you within the limit while still allowing you to keep a reliable vehicle.

Following these steps helps you avoid unnecessary complications and keeps your trust deed on track from start to finish.

Worried About Losing Your Car to a Trust Deed?

If your car is the one thing standing between you and everyday life, getting to work, picking up the kids, getting to appointments, it’s completely understandable to feel uneasy about entering a debt solution. The good news is that most people in a trust deed do keep their car, but every situation is different, and it’s worth getting advice specific to yours before you decide anything.

At Debt Advisory Services, we help you look at the full picture, not just the worry in front of you:

• Expert support – our advisers review your income, debts, and assets, including your car, and talk you through whether a trust deed or another solution fits your circumstances.
• Comprehensive resources – understand exactly how asset rules, value limits, and finance agreements work, so you know what to expect before you commit to anything.
• Honesty and integrity – clear, ethical, and transparent advice from your first conversation through to choosing the right way forward.

Take the first step toward getting your debt under control, without losing what you rely on day to day. Fill out the form below to speak with a qualified advisor and find the right solution for your situation today!

[Important Note: For additional independent guidance, you can also access free resources from MoneyHelper, the UK’s official platform for managing debt and finances.]   

Conclusion

In most cases, you don’t have to choose between dealing with your debt and keeping the car you rely on. As long as you have a genuine need for it and its value falls within the usual limit, your car can stay with you throughout your trust deed.

The details matter, though. Whether your car is on finance, over the value threshold, or you’re thinking about new credit down the line, the right approach depends on your specific circumstances. Being upfront with your trustee from the start is the simplest way to avoid problems and keep things running smoothly.

If you’re still unsure how a trust deed would affect your car, or whether it’s even the right solution for you, speaking to a qualified advisor is the best next step. Getting clear, honest advice early on means you can make a decision with confidence, rather than guessing at what might happen. 

Key Takeaways

• You can usually keep your car in a trust deed, as long as you have a genuine, reasonable need for it, such as commuting to work, school runs, or living in a rural area.
• Your trustee decides whether your need for a car is reasonable, so being upfront about your situation early makes the process easier.
• Most trustees use a value threshold of around £3,000, and cars under this limit are typically kept without issue.
• If your car is worth more than the threshold, you may need to sell it, trade it for a cheaper model, or pay the difference to your trustee.
• Car finance is treated as secured debt, so it sits outside your trust deed and you continue paying the lender directly.
• Missing car finance payments can still lead to repossession, regardless of your trust deed status.
• If your car is repossessed and a shortfall remains, this debt usually becomes unsecured and can be added to your trust deed.
• You can apply for new car finance during a trust deed, but only with your trustee’s permission, and only if it’s genuinely necessary.
• A trust deed doesn’t affect your car insurance, and you don’t need to disclose it to your insurer.
• Once your trust deed ends, full ownership of your car is restored and all restrictions from the agreement come to an end. 

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