As loan specialists one thing we have noticed is that people often take out a loan to purchase a car before buying property and don't realise just how much that can hold them back from buying that dream home that they want.

How much of an impact it can have by applying for a car loan, versus maybe paying for that car in cash, if you're able to.


Couple one - Has one car loan eachCouple Two - Does not have a car loan

The impact on the borrowing power:

Couple two are able to borrow almost $200,000 more because they haven't applied for finance for a car loan.

The next time you’re looking at property, and maybe looking to buy a car before that, take into account how much that loan for a car will affect your borrowing power. The other thing to remember with cars is that once you do purchase them, they start to decline in value. Often they will decline at a faster rate than you are paying down the loan that is attached to them. You may end up in a position whereby you’ve got a car worth much less than what the debt is owing against it.