Can a Fully Maintained Company Car Increase Your Home Loan Borrowing Capacity?

Does a Company Car Increase Your Home Loan Borrowing Capacity?

A fully maintained company vehicle may improve home loan borrowing capacity with some Australian lenders. Learn which costs must be covered, what evidence is required and how lender policies differ.

Having a fully maintained work vehicle can improve borrowing capacity with some Australian lenders.

The benefit is usually modest, but it can matter when a home loan application is close to a lender’s servicing limit.

The reasoning is straightforward. Household living expense benchmarks generally assume that a borrower incurs normal transport costs. If an employer supplies a vehicle and pays the registration, insurance, maintenance and running costs, the employee may have lower personal expenses than another borrower earning the same salary.

Some lender policies recognise this by adding a notional amount to the applicant’s income. Others make no adjustment, require the vehicle benefit to be taken as cash, or have removed the concession entirely.

What is a fully maintained company vehicle?

A fully maintained company vehicle is generally a car supplied by an employer for the employee’s business and personal use, with most or all associated costs paid by the employer.

Depending on the employer’s arrangement, covered costs may include:

• vehicle purchase or lease costs;
• registration;
• comprehensive insurance;
• servicing and repairs;
• tyres;
• fuel;
• roadside assistance; and
• other normal running expenses.

A vehicle used only during working hours may not qualify.

Likewise, a vehicle supplied by an employer is not necessarily “fully maintained” if the employee still pays for fuel, registration, insurance or private use.

The lender will usually want confirmation that private use is unrestricted and that the employee does not bear any meaningful vehicle costs.

How much can a fully maintained vehicle add to borrowing capacity?

Among the lender policies reviewed, at least nine provide a specific servicing benefit for an eligible fully maintained company vehicle.

The amount varies:

Lender policy	Potential servicing treatment
Westpac	Up to $5,000 gross per year
Suncorp Bank	Up to $5,000 net per year, once per household
ING	Up to $3,500 post-tax per year
St.George	Up to $5,000 gross per year
Gateway Bank	Up to $5,000 added to gross taxable income
Resimac	Up to $4,000 per year
Firstmac	Up to $5,000 added to gross income
Newcastle Permanent	$5,000 non-taxable
Teachers Mutual Bank	Up to $5,000 added to net income
Pepper Money	Up to $5,000 added to gross taxable income

The terminology matters.

A $5,000 gross-income addition does not produce the same servicing result as a $5,000 net-income addition. Each lender’s calculator applies tax and living-expense assumptions differently.

The adjustment should be entered according to the lender’s instructions rather than simply adding $5,000 to the applicant’s salary in every calculator.

Does every lender allow the old $5,000 company car add-back?

No.

Several lender policies do not provide a documented servicing adjustment for a fully maintained company vehicle.

Macquarie, ANZ, NAB, Commonwealth Bank, Bankwest, People First Bank, ME Bank and UBank do not have a clear general company-car add-back in the lender policies reviewed.

That does not necessarily mean a vehicle can never be considered. It means there is no reliable published treatment that should be assumed without confirmation.

MyState’s lender policy expressly states that the servicing income adjustment for a fully maintained company vehicle was removed from 1 July 2024. A separately paid car allowance may still be considered under its allowance policy.

RedZed takes another approach. Its lender policy does not reduce living expenses merely because the applicant has a company car. A salary-packaged car allowance may be included only where the benefit can be taken as cash and is confirmed by the employer.

Why do lenders add an income amount instead of reducing expenses?

Home loan applications generally use the higher of:

• the borrower’s declared living expenses; or
• the lender’s applicable household expenditure benchmark.

Standard expenditure benchmarks normally include a basic allowance for transport and vehicle costs.

Even when the applicant declares very low transport expenses, the lender may still apply its minimum benchmark. Simply reducing the applicant’s declared fuel and registration costs may therefore have little effect.

A notional income adjustment allows the lender to recognise the employer-provided benefit while continuing to apply its standard expenditure benchmark.

This is also why an applicant should not normally claim both:

• a fully maintained vehicle income benefit; and
• an artificial reduction in expenses below the lender’s permitted level.

The lender’s calculator should account for the benefit according to its own method.

What evidence is required?

The lender will generally require written confirmation from the employer.

Depending on the lender policy, acceptable evidence may include:

• an employment contract;
• an employer letter;
• an email from the employer;
• a remuneration package statement; or
• another formal employment document.

The document should clearly confirm:

• the employee is entitled to the vehicle;
• the benefit is ongoing;
• the vehicle can be used privately;
• private use is unrestricted or substantially unrestricted;
• the employer pays the relevant costs;
• the employee does not make a material contribution; and
• the vehicle is separate from any cash allowance already included in income.

A vague statement that the employee “has access to a work car” is unlikely to be enough.

What should the employer’s letter say?

An employer letter could confirm:

The employee is provided with a fully maintained company vehicle as an ongoing condition of employment. The vehicle is available for unrestricted business and private use. The employer pays the vehicle’s registration, insurance, servicing, maintenance and normal operating costs. The employee is not required to make any payment towards these costs.

The exact wording should reflect the real employment arrangement.

An employer should not be asked to state that the vehicle is fully maintained where the employee actually pays some of the costs.

What if the employee pays for fuel?

The answer depends on the lender and the size of the employee’s contribution.

Some lender policies require the vehicle to be available at no cost or minimal cost to the employee. Others expect the employer to cover registration, insurance, servicing and running costs.

Where the employee pays for private fuel, tolls, parking or another expense, the lender may:

• still accept the benefit;
• reduce the notional amount;
• include the employee-paid costs in living expenses; or
• decline to apply the concession.

The arrangement should be disclosed accurately.

Does a tool-of-trade vehicle qualify?

Potentially, but access to a work vehicle during business hours is not enough by itself.

Consider two employees:

Employee A: unrestricted company car

The employee takes the car home, uses it on weekends and holidays, and pays no registration, insurance, servicing or fuel costs.

This is more likely to satisfy a fully maintained vehicle policy.

Employee B: work-use vehicle

The employee collects the vehicle from the employer each morning, uses it for work and returns it at the end of the day.

They own and maintain another car for personal use.

This arrangement is unlikely to create the same household saving.

The lender is interested in whether the benefit reduces the applicant’s ordinary personal transport costs.

Is a car allowance treated the same way?

No.

A car allowance is cash income paid through payroll. A fully maintained vehicle is a non-cash employment benefit.

Lender policies may treat a car allowance as ordinary or variable employment income where it is:

• permanent;
• recurring;
• shown on payslips;
• received for a sufficient period; and
• expected to continue.

The lender may also include associated vehicle expenses or lease payments.

For example, an employee receiving a $15,000 annual vehicle allowance may still need to pay:

• a car loan or lease;
• registration;
• insurance;
• fuel;
• maintenance; and
• work-related travel costs.

The full allowance may therefore not represent additional disposable income.

A fully maintained vehicle adjustment is usually a fixed notional amount rather than the estimated market value of the car.

Related research: Can You Use Car Allowance or Travel Allowance for a Home Loan?

What about salary packaging and novated leases?

A salary-packaged vehicle or novated lease is different from a vehicle supplied entirely at the employer’s cost.

Under a novated lease, payments may be deducted from the employee’s pre-tax and post-tax salary. The lender will generally assess the ongoing lease commitment and the effect of the deductions on take-home pay.

Some employer arrangements are described as “company cars” even though the employee effectively pays for the vehicle through salary sacrifice.

The lender may request:

• payslips showing deductions;
• the novated lease agreement;
• the remaining lease term;
• the balloon or residual payment;
• confirmation of included running costs; and
• an explanation of whether the arrangement ends if employment changes.

A vehicle should not be treated as a free fully maintained benefit where the cost is deducted from the applicant’s remuneration.

What if the employee can take cash instead?

Some lender policies distinguish between:

• a vehicle that must be accepted as a non-cash benefit; and
• a car package that can be converted into cash salary.

Where the employee can elect to receive cash, the lender may assess it as an allowance or salary component rather than applying a notional company-car benefit.

The employer may need to confirm:

• the cash amount;
• whether the election can be changed;
• whether the cash option is permanent;
• whether it is included in taxable income; and
• whether choosing cash would require the employee to fund their own vehicle costs.

A borrower cannot generally count both the cash allowance and the fully maintained vehicle benefit.

Can both applicants claim the adjustment?

This depends on the lender policy.

Suncorp Bank’s lender policy limits its notional $5,000 adjustment to once per household.

Other lenders may assess each eligible applicant separately, but this should not be assumed. The servicing calculator and lender guidance should be checked where both borrowers receive employer-provided vehicles.

Does the adjustment apply if the car is part of packaged income?

Not always.

ING’s lender policy specifies that the fully maintained car must not form part of packaged income for its company-car servicing benefit to apply.

Other lenders may differentiate between:

• a vehicle provided in addition to salary;
• a vehicle funded through salary sacrifice;
• a car allowance;
• a novated lease; and
• a reimbursement of work expenses.

The applicant’s remuneration documents need to show which arrangement applies.

Are kilometre reimbursements acceptable?

Mileage or kilometre reimbursements are usually treated differently from employment income.

They reimburse the employee for expenses incurred while using a personal vehicle for work. The payment may vary with travel and may not continue if the employee’s duties change.

La Trobe Financial’s lender policy, for example, distinguishes between a confirmed car allowance, which may be considered, and mileage reimbursements, which are not accepted as income.

An applicant should avoid describing kilometre reimbursements as a permanent car allowance.

Example: how the benefit may affect borrowing capacity

Consider an applicant earning $100,000 a year who receives a fully maintained company car.

The employer confirms that:

• private use is unrestricted;
• registration and insurance are covered;
• servicing and repairs are covered;
• fuel is covered; and
• the employee makes no contribution.

A lender allowing a $5,000 gross adjustment may assess employment income as though it were $105,000 for servicing purposes.

This does not mean the applicant receives an extra $5,000 in cash. It is a calculator adjustment recognising reduced personal transport costs.

The actual increase in borrowing capacity will depend on:

• the lender’s assessment rate;
• tax treatment;
• existing debts;
• household size;
• living expenses;
• loan term;
• credit limits; and
• the lender’s servicing buffer.

The improvement could be useful without changing an otherwise unsuitable loan into an appropriate one.

Related research: Do Credit Card Limits Affect Your Home Loan Borrowing Power?

Can the benefit be used during probation?

The fully maintained vehicle adjustment does not override the lender’s employment policy.

If the applicant is:

• on probation;
• newly employed;
• casual;
• on a fixed-term contract; or
• receiving the vehicle temporarily,

the lender will assess both the employment arrangement and the vehicle benefit.

The employer letter should confirm that the vehicle forms part of the ongoing role rather than being a temporary project benefit.

What happens if the employee changes jobs?

The benefit may end when employment ends.

A borrower should consider whether the proposed loan remains affordable if they later:

• move to an employer that does not provide a vehicle;
• receive a cash allowance instead;
• need to purchase a personal car;
• take unpaid leave;
• retire; or
• lose access to private use.

The lender’s servicing adjustment reflects the current verified position. It does not protect the borrower from future transport costs.

The main point

A fully maintained company car can improve borrowing capacity with some Australian lenders, but the treatment is far from universal.

The strongest applications have written employer confirmation that:

• the vehicle is an ongoing employment benefit;
• unrestricted personal use is permitted;
• the employer pays the major ownership and running costs; and
• the employee makes no material contribution.

Depending on the lender policy, the servicing adjustment may range from $3,500 to $5,000 per year. Other lenders provide no adjustment or require a separately paid cash allowance.

The benefit should be assessed under the selected lender’s current calculator rules rather than added to income automatically.

General information disclaimer

This article contains general information only and does not take into account your objectives, financial situation or needs. It does not constitute financial, taxation, employment or credit advice.

Lender policies, servicing calculations, acceptable income types, verification requirements and borrowing capacity results can change without notice. A fully maintained vehicle benefit does not guarantee loan approval, and any adjustment remains subject to the lender’s complete credit assessment.

Consider whether the proposed repayments would remain affordable if your employment benefits or vehicle arrangements changed.