Credit Check Score and Borrowing Power for Car Loan

Hi fellow financial experts.

I am about to take a personal loan to purchase a car for personal use. This is expected to happen around June or July.
Planning to get a loan between $30k-$35k.

In preparation for that, few questions regarding what I can do to improve my credit rating / credit check / borrowing power.

  • Will having any AfterPay / ZipPay etc impact the loan?
  • No credit cards is always better / preferred if not mistaken?
  • Spending on entertainment / leisure using cash to avoid it surfacing in my debit card records to the bank?

I prefer using cash when buying items, however I'm not sure whether this is a good idea.
I have heard that having a long term credit history helps.

Any comments are welcomed

Updated question; any significant benefits of buying cash vs loan besides the interest?



    There will be changes to Equifax credit score at the end of the month.

    This article answers some of your questions


    Good stuff. Thanks.
    Does increasing my cash in savings account help?
    I'm moving some funds from overseas, not sure if I should park it into my savings account.


      Increasing cash savings doesn't help much. The Bank knows you could just take it to the casino the day after you get the loan and spend it all.

      Credit reporting system is different in Australia to USA. Most advice about "building a credit score" is USA specific. In Australia credit scores can be built from making on time payments to any utility bills you have so no need to take out credit just to build the score.

      If you have savings why not use that to purchase the car? Financing a depreciating asset is a bad idea.

  • +7 votes

    Friends don't let friends take out car loans.


      Pretty sure you're not friends with OP


        Yeah, was hoping Op's friends would intervene.

        They did call me a financial expert, so i was offering my expert financial advice.


      If the lease/loan is cheap (mortgage rates-ish) then why not? Though OP without much of a credit history and if it's going to be a consumer loan then that's going to be a challenge…


        Because you're paying interest on a depreciating asset. The definition of literally lighting money on fire

  • +1 vote

    Do you own a home? Don’t blow so much on a car if so, why do you need such an expensive car? It’s a depreciable liability. Saying this only because when I was younger I made the mistake of wasting money on cars when I wish I had ploughed it into assets instead. Don’t want you to make a similar mistake.


      And 37% of all young males too



  • +1 vote

    Don’t get a car loan. It means you are living above your means.


    Will having any AfterPay / ZipPay etc impact the loan?

    Yes and No… we recently got a home loan with my partner having AP and me Zip, bank didnt care just wanted to see we were never behind and could afford it and our home loan. If you have late payments then it will affaect your socre.

    No credit cards is always better / preferred if not mistaken?

    Having a credit card can show lenders you are responsible with your money if you pay it off, we have one that we use for everything to get points but we clear it every month. If you have a balance of say 10K owing then that might look negative. The lender will also consider the credit limit in your evanluation. If you wnated to borrow 35K and you had a 12K credit card and the lender determines your "borrowing power" is $40K then they would only offer you 28K (28K + 12K =40K)

    Spending on entertainment / leisure using cash to avoid it surfacing in my debit card records to the bank?

    Lenders always assume you have leisure and entertainment expenses and will set aside an amount regardless, if you can show how you spend on leisure its better beucase this might be a lower amount than their assumed one.

    And as for all the "do not get a car loan" comments, if you wish to borrow to buy a nice car and you can afford to repay it then go right ahead. Do not let all the negative nancies bring you down.


      @jimbobaus thanks for all the useful comments.

      I actually do have enough cash to purchase the car outright but was contemplating to invest it elsewhere.
      Any significant benefits of paying cash vs loan? besides the obvious interest rate


        if you can afford it .. pay cash 100%
        Cars are a depreciating asset, the minute you drive off the lot it will be worth less than you paid.

        If you do not have the cash but can afford to repay a loan over 3,4,5 years etc then I say go for it.
        Even if you borrow part (put in 25% or something so you have some equity)


    If you can afford to pay cash, pay cash


    I was thinking to get a 1 or 2 year loan. Just wanted to invest my cash elsewhere


    What’s the interest rate on the loan?

    I bought a van last year, was going to pay cash but they had a 1% interest rate deal. Went for the finance instead and I had the extra cash that I can use for other things.


    OP, don't consume from debt. Get a cheaper car instead.