Car Loans - Mortgage Broker Canberra (2024)

FAQs

Does having a car loan affect getting a mortgage in Australia? ›

To assess your repayment capabilities, lenders will review your income and assets in relation to your debts and other ongoing expenses. This is known as your debt-to-income ratio. Owing money on a car loan can have a significant impact on your ability to qualify for a mortgage.

Debt-to-income ratio

Under the new qualified mortgage rules, your monthly debts—including your auto loan—cannot exceed 43% of what you bring home. If your auto loan pushes you above the limit, you may not qualify for a home loan.

When it comes to securing a car loan in Australia, there is no set minimum credit score that applies universally to all lenders. Instead, different lenders have varying criteria. While many lenders typically look for a credit score of at least 600 to 620, some sub-prime lenders may consider scores as low as 550.

Car loans are reflected in your credit report which, as we know, is a factor in your loan eligibility. But the impact a car loan has on your mortgage can go either way. A clean, established payment history on your car loan can boost your credit score and, by extension, raise your chances of qualifying for a mortgage.

More often than not, an installment loan (i.e. car loan or student loan) can be excluded during the approval process so long as you only have 10 payment or less to make. While some lenders have their own restrictions, most conventional and unconventional mortgage products allow you to exclude this debt.

If you have excellent credit and enough purchasing power to meet the lender's criteria, you shouldn't have a problem buying a car and then a home. But you may want to wait at least six months between purchases so your scores have enough time to increase.

Yes, you can combine a mortgage and an auto loan by using a cash-out refinance. You need enough equity in your home to pay off the auto loan and to have 15 to 20% equity left over. Be aware that this type of loan consolidation can cost you much more in interest than if you were to refinance your auto loan separately.

You can get a car loan and a house at the same time. However, it is best to purchase the home first and then get the car. We suggest you do not allow the car dealer to pull your credit until after you close on your mortgage. Then, you can go from the closing on your home right to the auto dealer to purchase your car.

The lender will typically follow what is called the Five Cs of Credit: Character, Capacity, Capital, Collateral and Conditions. Examining each of these things helps the lender determine the level of risk associated with providing the borrower with the requested funds.

What are the conditions for a car loan in Australia? ›

All lenders usually have at least three car loan eligibility criteria: you must be at least 18 years of age. you must be either an Australian citizen or permanent resident. you must be able to afford your repayments (which involves proving your income).

In general, lenders look for borrowers in the prime range or better, so you will need a score of 661 or higher to qualify for most conventional car loans.

On average, borrowers request a car loan amount of $44,547 for new vehicles, and $30,005 for used cars, according to Money data.

According to our research, AutoPay currently offers the best auto loan rate for new car purchases, with annual percentage rates (APR) as low as 4.67% for new vehicles. PenFed Credit Union, Auto Approve, Consumer's Credit Union, Auto Credit Express and iLending also offer some of the most competitive rates available.

The average car loan interest rate in Australia is 12.26% p.a. Here are the lowest car loan rate currently available on Money's database of lenders for different types of loans and car purchases: Green car loan: 5.49% p.a. (5.84% p.a. comparison rate) New car loan: 5.66% p.a. (6.45% p.a. comparison rate)

You can get a car loan and a house at the same time. However, it is best to purchase the home first and then get the car. We suggest you do not allow the car dealer to pull your credit until after you close on your mortgage. Then, you can go from the closing on your home right to the auto dealer to purchase your car.

Physical assets include anything tangible that you own that's valuable – anything that can be touched. Physical assets that can be sold for funds to be used to qualify for a mortgage include – but are not limited to – properties, homes, cars, boats, RVs, jewelry and artwork.

Yes, you can combine a mortgage and an auto loan by using a cash-out refinance. You need enough equity in your home to pay off the auto loan and to have 15 to 20% equity left over. Be aware that this type of loan consolidation can cost you much more in interest than if you were to refinance your auto loan separately.

Every car loan application can potentially cost your credit score a few points. However, you can avoid losing points by getting preapprovals (with no hard credit pull) before applying, and by limiting all of your car loan applications to a 14-day window.