Do you receive a car allowance as part of your income?

Banks and other lenders don’t always use common sense when they calculate your income to assess your loan application.

Many don’t include a company car allowance as part of your income and this may limit the amount you are entitled to borrow.

However, there are some lenders that will take a vehicle allowance or company car benefit into account. Read on to find out how to maximise the amount you can borrow.

How do the banks view these benefits?

Although a car allowance forms part of your salary, it’s not like your base salary. Many lenders are of the belief that any additional funds received, will be used solely to maintain the car and not for any other purpose such as a mortgage repayment.

Most banks ignore vehicle allowances because they assume that these are used to pay for travel costs incurred. Some believe that a company car itself isn’t a “cash” benefit that can be spent but rather a saving on your normal living expenses.

However, not all lenders think this way! We know of banks that may be able to include your car allowance as part of your income! If you would like to find out your car allowance can be included, contact our expert brokers on 1300 889 743 or enquire online today!

Which lenders include car allowance?

Our best lender for car allowances / company cars will take 100% of the car or travel allowance you receive into consideration or will add $5,000 to your assessable income when calculating your borrowing capacity.

A few lenders can even consider travel allowances and other benefits assuming that they are not reimbursements for costs you have incurred.

How much can I borrow?

With our best lenders you can borrow up to 95% of the property value while including this additional income. Many other lenders are constrained by their Lenders Mortgage Insurer (LMI) when taking this income into account and as a result cannot lend more than 80% of the property value.

You can also use meals and entertainment allowance payments if they are ongoing and you have been receiving them regularly.

What is a car allowance?

A car allowance is a sum of money given to an employee for the upkeep of their company car. It may be included in their salary as an additional benefit. The money is then used to pay for goods and services related to maintenance of the car. This may include cleaning the car, fuel, inspections and repairs.

These arrangements differ from employer to employer, but all terms are generally included in the contract of employment. The contract may include important information such as:

  • How fuel and other costs are to be paid
  • Whether the car can be used for purposes other than work
  • Upkeep and maintenance responsibilities
  • Who can drive the car

However, if the car is kept at home and you use it to drive to and from work, this is generally an indication that the vehicle can be used for private purposes.

Who gets a car allowance?

Employees who work for large companies and use a car in their role are generally entitled to a car allowance. Some individuals may work as sales representatives and may be required to travel long distances by car to reach customers and clients. Others may use a car to run work related errands or travel to work events.

If you’re an employee who requires a car to carry out tasks, you may be eligible for a car allowance. The amount that you are entitled to receive differs according to your job and employer. However, there are standard tax deductions available that you can claim.

For more information on whether your car allowance can be included as income, enquire online or call 1300 889 743 to speak to our expert mortgage brokers today.

Apply for a home loan today!

Here at Home Loan Experts our mortgage brokers have extensive knowledge of the guidelines used by Australian lenders!

If you are looking to purchase your first home, finance a construction project or purchase an investment property, please enquire online or call us on 1300 889 743 to discuss your situation with one of our expert mortgage brokers.

  • Jade2349

    I’d like to borrow 90% with the help of the company car allowances I receive. By my estimations, it should just get me over the mark.

  • Hi Jade2349, we can help you with this. Please complete our free online assessment form and we will have one of our expert mortgage brokers call you up within 24 hours to discuss your situation and loan needs in detail.

  • Tony Tony

    I also get other fringe benefits aside from car allowance. Will I be able to get them considered by the bank as well?

  • Hello there,

    We know of two lenders that can add fringe benefits to your gross taxable so it better reflects your actual income. The amount that the lender will add and how much of the fringe benefit they will use depends on the type of benefit it is. As long as you can prove that the fringe benefit is regular and ongoing, you could potentially borrow up to 95% of the property value.

  • acosta

    Do all lenders accept car allowance as income in their assessment?

  • Hi acosta,

    There are many lenders that may not include a company car allowance as part of your income, and those that do may be very conservative. Our best lender for car allowances / company cars can accept 100% of the car or travel allowance you receive or will add $5,000 to your assessable income when calculating your borrowing capacity.

  • Bedolla

    I am a salaried employee with a vehicle allowance packaged into my pay. This also includes some extra travel expenses at times. I have not found any bank or lender to accept all of this. I do not think I can borrow as much as I would like without having it completely included in the lender assessment. Can you help?

  • Yes, we can help. We have dealt with many clients who had a packaged salary that included company vehicle and travel expenses incorporated into it. Our best lender for car allowances and company car packages can accept 100% of this allowance or will at least add $5,000 to your assessable income. Please call 1300 889 743 to discuss your situation and loan needs with an expert mortgage broker.

  • Jules

    Along with a vehicle and travel allowance, I also get meals and entertainment allowance. Can this too be used in my home loan assessment?

  • Hey Jules,
    If your meals and entertainment allowance is regular and ongoing and doesn’t exceed $5,000 per year, some lenders can add back 100% of this allowance. Please check out this page if you’d like to learn more about it:

  • Durand

    I went with a bank for a home loan but serviceability became an issue – I receive a base salary and a car allowance consistently each month. The bank used my YTD, which came up lower because of pay increase. Can you help me get the loan or apply with another bank so this problem doesn’t happen again?

  • Yes, we can help you Durand. There are lenders that can accept car allowance or at least add back a certain amount so your living expenses decrease. We will need confirmation from your employer on your pay increase and then go with a lender that can take a more common sense approach to this, if your existing lender won’t still change their assessment. Please call 1300 889 743 to discuss with an expert mortgage broker.

  • Oli

    Hi, I’m a truck driver and I receive close to $10,000 in vehicle allowances. I went with Suncorp for a home loan and they said they won’t use the full but only $5,000 in their assessment. I had to borrow a bit lower and I don’t have the deposit for that. Other lenders do this too?

  • Yeah Oli, Suncorp don’t accept 100% allowance income and some other lenders may only accept 50%. However, we know lenders that can accept 100% as long as you can meet specific conditions, which vary from lender to lender. We can help you find the right lender for your situation and loan needs so please call 1300 889 743 to discuss it with an expert allowance income home loan specialist.