Car Loan vs. Car Subscription: Which is Better for Your Home Loan Application?
Which Is Best?
When you’re preparing to buy a home, every dollar counts. You’ve likely spent months saving for a deposit, cutting back on unnecessary expenses, and getting your finances in order. But if you also need a car, how you choose to get behind the wheel can make or break your mortgage application.
Many Australians don't realize that a traditional car loan can severely reduce their home loan borrowing capacity—often by tens of thousands of dollars. On the other hand, a car subscription offers a flexible alternative that keeps you on the road without locking you into long-term debt.
Here’s exactly how banks view car loans versus car subscriptions, and why choosing a subscription might be the smartest move for future homeowners.
Watch Our Explainer Video
The Heavy Hit of a Car Loan on Your Borrowing Power
When you apply for a mortgage, banks are legally required to assess your ability to repay the loan. To do this, they look closely at your liabilities, which are formal debts recorded on your credit file.
A traditional car loan is classified as a major liability. When a bank sees a car loan, they don't just look at your current monthly repayment. They apply a serviceability buffer—an additional interest rate margin (usually around 3%)—to ensure you could still afford the loan if interest rates were to rise.
Because car loans are typically paid off over a short period (usually 3 to 7 years), the monthly repayments are relatively high. This high repayment amount is deducted directly from your uncommitted monthly income, drastically reducing your borrowing capacity.
For example, a $600 monthly car loan repayment could reduce your maximum home loan borrowing capacity by approximately $100,000. That’s the difference between securing your dream home or having to settle for something much smaller.
Why a Car Subscription is Treated Differently
A car subscription, like the ones offered by ClickMe Cars, operates on a completely different model. With a subscription, you pay a single weekly or monthly fee that covers the use of the car, as well as registration, insurance, maintenance, and roadside assistance.
Because you aren't taking out a loan to purchase a depreciating asset, a car subscription is generally not classified as a debt or liability. There is no long-term credit contract, and it doesn't sit on your credit file as a massive loan.
Instead, banks typically treat a car subscription as an ongoing living expense—similar to how they view your streaming subscriptions, gym memberships, or grocery bills.
While a subscription does reduce your disposable income, it avoids the harsh serviceability buffers applied to formal debts. Lenders simply add the subscription cost to your monthly living expenses, which are often measured against a benchmark.
The Power of Flexibility
One of the biggest advantages of a car subscription when applying for a mortgage is flexibility.
Traditional car loans lock you in. If you suddenly need to increase your borrowing capacity, exiting a car loan early can be incredibly difficult and often involves hefty break fees.
With a ClickMe Cars subscription, you have the ultimate flexibility. There are no lock-in contracts, meaning if you need to reduce your expenses right before applying for a home loan, you can simply return the car with short notice. Banks look favorably on discretionary expenses that can be easily canceled if you ever experience financial stress.
Everything Included.
Nothing Hidden.
Choosing a car subscription means you get predictable expenses with fixed payments, making financial planning a breeze. When you’re saving for a house, the last thing you need is an unexpected $1,500 repair bill or a massive annual registration fee.
With ClickMe Cars, everything is wrapped into one neat, regular payment. No surprise bills, no hidden fees, no stress. This simplicity allows you to focus on saving for your home deposit, giving you peace of mind while managing your transportation needs efficiently.
The Final Word
If your primary goal is to maximize your borrowing capacity to purchase a home, avoiding a traditional car loan is highly recommended. A car subscription is a strategic alternative that keeps the vehicle off your credit file as a liability, protects your debt-to-income ratio, and gives you the flexibility to adapt your finances when you need to.
Ready to get behind the wheel without sacrificing your home ownership dreams? Browse our cars today and discover how a ClickMe Cars subscription can keep you moving forward.
FAQs
Can I get a car same day?
Yes, all our available cars are ready to go immediately.
Simply apply online or in person to get approved and start driving.
Our fastest approval type is Easy Path.
I have a licence and proof of address - what else do I need?
A driver’s licence and a proof of address are the minimum documents required.
You can provide additional documents to potentially reduce your bond.
Can I return the car within 60 days?
At any time, you can cancel with 1 week's notice.
If you need to cancel in the first 60 days, your access to the car is treated as a rental and rental rates apply.
Rental rates are higher than long term rates.
I can't afford payment this week - do I have to return the car?
Payments are required to be made in advance.
If you cannot make payment by the due date, please contact us.
You may be required to return the car for a short hold until your payments have been caught up.
Can I drive additional km?
Our weekly km allowance is exactly that - an allowance - not a restriction.
When we assess your km, we calculate your usage as an average over the whole time you’ve had the car.
If you drive a lot this week and less next week, provided the average is equal to or less than your allowance, there are no extra charges.
If your average usage suggests that you drive more than your included km per week, you will be required to pay for additional km at the rate set out in your agreement.
We have discounted additional km packages available for super users.
What if the car needs a service?
As a fully managed service, we take care of organising and paying car servicing and other maintenance such as tyres and brakes.
Please contact us to organise a complimentary service at a location close to you.
You will need the car’s current odometer so our team can book the service.
If I have an accident, what do I do?
Firstly, ensure everyone is okay.
If there are any injuries or anyone is in danger, call 000 immediately.
Once everyone is safe, call us to report the accident.
Our 24 hour accident and breakdown line will be able to advise you on what to do next.
While at the scene, ensure you collect the other driver’s information such as driver’s licence number, phone number, email address and home address.
Please also take photos of the accident.
Can I get my own toll account?
We encourage all customers to sign up for their own toll account directly with Linkt.
If you use a toll road without a toll account, we will receive a paper toll notice which we will nominate to you. A toll convenience fee will apply.
How do I apply to leave the 150km zone?
Our cars can be used within our 150km zone.
You must apply to leave the zone 2 weeks in advance.
If approved, you will need to provide your travel dates and pay a refundable travel bond.
Can I pay monthly or fortnightly?
By default, our payments are weekly.
You can request to change your payments to weekly or fortnightly, provided that your payments are made in advance.
Can I use the car for towing?
Yes - depending on the car you subscribe to.
Some cars can be fitted with a tow package, enabling towing capabilities up to the weight limit set by the manufacturer.
Our tow package is are $19/wk, and there may be an additional hardware cost.
Features And
Benefits
Flexible access to a car
You’re never locked in. You can cancel at any time with 1 weeks’ notice.²
You can also swap cars at any time. A car swap fee applies.
Fully managed
We organise and pay for:
- registration
- servicing
- tyres
- brakes
If there are any mechanical faults that aren’t the driver’s fault, we will pay for the repairs.
Always on the Road Guarantee
If the car stops working due to an unforeseeable mechanical issue, we will get it fixed or provide a replacement car in the interim.
No credit check application pathways
Easy Path - low docs
- licence
- second proof of address
Documents Path - low bond
- licence
- second proof of address
- payslip
- 2 months bank history
Things To
Know
Weekly payments in advance
Your subscription is prepaid.
This means that when you pay, you are paying for the week ahead.
Refundable bond
Paid on pick up.
Refundable when the car is returned:
- clean
- refuelled
- no additional km
- no new damage (fair wear and. tear excluded)
60 day minimum
Cancel anytime with 7 days notice.
If you cancel in the first 60 days additional costs apply.²
600km included weekly
600km/wk included.
If you need additional km, packages are available:
+ 100km/wk $30
+ 400km/wk $99
No rideshare
We don't have insurance for rideshare
That means no rideshare on Uber, Didi and similar platforms.
Food delivery is allowed, but please be mindful of your weekly included kms.
Additional drivers
Additional drivers need to provide a valid licence and be approved by us to drive.
A small additional driver fee applies.
