Car Loans for Pensioners: Could Your Home Unlock Your New Car?

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Whether it’s for the weekly grocery run, visiting friends and family, or even exploring the country, having a safe and reliable car is important to most retired Australians who want to maintain their independence. Despite this necessity, car loans for pensioners and retired Australians can be hard to find or simply haven’t been designed for your needs.

While there are car loans for pensioners on the market, it can be difficult to find the one that best fits your needs, lifestyle and financial situation. That’s why we’ve outlined some of the car financing solutions for Australians over 60— including how your home could fund more than just a new car in retirement.

Car Loan Options for Australians Over 60

According to a study from RMIT University, most retirees prefer to “age in place,” especially after investing in home modifications to make their home retirement-ready. Those who decide to live in their own homes often have a strong desire for the flexibility and independence that having a car provides. 

If you’re a retiree who doesn’t have access to a reliable car, it can be challenging to live life on your own terms and stay connected with your loved ones and community. 

You have multiple options when choosing a car loan, all of which have distinct benefits and requirements. Some of these include

• Standard car loan: Offered by banks and credit unions, standard car loans allow you to borrow a fixed amount with fixed or variable interest, often secured against the car. But for retirees, the income requirements of a standard car loan can be challenging to fulfill, and the monthly payments can greatly impact their budget.
  
• Finance lease: A finance lease allows you to lease a vehicle for personal or business use without owning it. You make monthly payments and cover maintenance costs, with options to buy or return the car at the lease end. It’s a good option to consider if you’re only looking to temporarily own a car or are unsure about buying a vehicle outright. While it can be a great option, leasing may only be available if you’re over 60 and still working or semi-retired, as eligibility often depends on having a regular source of income.

Home equity: If you own your home, accessing equity from your home can provide you with a great solution for buying a reliable car. To access your home equity you can use a reverse mortgage or the Home Equity Access Scheme (HEAS). A reverse mortgage, such as Household Capital’s Household Loan, allows homeowners over 60 to borrow against the value of their property, converting it into income or capital without monthly repayments. Similarly, the HEAS provides a government-backed option to release home equity. However, it’s important to note that the HEAS has maximum lump sum withdrawal limits each year, which may restrict your options when looking for a new car. Either way, both options allow you to secure the necessary finances for a car while maintaining your independence and home ownership.

Unlock Retirement Funds with our Household Loan or the HEAS

The Household Capital Household Loan and the government’s Home Equity Access Scheme (HEAS) both offer a way for you to access your home’s equity without needing to sell or relocate. Let’s take a deeper look at these two options.

Household Loan

A Household Loan is a type of reverse mortgage for Australian homeowners aged 60 or older to access the equity in their home. Because it allows you to unlock the financial value of your home, a Household Loan lets you borrow against your home’s value without the need to make regular repayments. The loan is secured by the property itself, giving you the freedom to live in your home for as long as you wish.

Here are some of the benefits of a Household Loan from Household Capital:

• No monthly repayments: You don’t need to make regular loan payments with a Household Loan. 

• Repayment when you leave or sell your home: The loan is repaid only when you permanently leave or sell the property. 

• No negative equity guarantee: You will never owe more than your home is worth, even if the loan balance exceeds the value of your home.

• Lifetime occupancy: You can remain in your home for as long as you wish, providing long-term stability.

Flexible use of funds: Access funds to meet a wide range of needs, including car financing, home renovations, medical expenses and more.

Home Equity Access Scheme

The HEAS is an Australian government scheme designed to provide retirees with financial flexibility by allowing them to access their home’s equity. With the HEAS (formally the Pension Loans Scheme), eligible Australians who own their home can supplement their income or fund specific goals, like purchasing a car. However, as mentioned above, the HEAS has a lump sum limit of $22,518 per year for couples and $14, 937 per year for singles. 

Household Capital offers support in navigating the HEAS through our Pension Boost service, helping you to effectively tap into your home equity. Unlike traditional loans, the HEAS provides a government-backed way to convert a portion of your home’s value into regular income or lump sum payments.

Here are the reasons why the HEAS is a versatile option:

• No restrictions on use: While many retirees use HEAS for living expenses, it can also be applied to one-off expenses like buying a new or used car.

• Flexible repayment terms: Repayments aren’t required until you sell your home, transition to long-term care, or choose to settle the loan earlier.

• Preserve your lifestyle: HEAS helps you access funds without selling your home, giving you financial freedom while staying in the place you love.

• Low-interest rates: Government-managed rates make it a cost-effective alternative to other borrowing options.

The flexibility of our home equity options make them ideal to use to meet a range of financial needs. Whether you need funds for home improvements, medical expenses or travel, we can help you unlock the wealth in your home and access the capital needed to fulfil your goals. Get started today by using our Home Wealth Calculator.

Car Loans for Pensioners: Australians Like You Are Using Their Home Equity

For Australians over 60, including pensioners, a car loan may not always be the best choice when it comes to financing a new vehicle. Traditional car loans are often tied to specific income requirements and mandatory monthly repayments which can add financial strain, especially for retirees on a fixed income. By contrast, Household Capital’s Household Loan and the HEAS offer a more flexible, secure way to fund car purchases by unlocking the wealth in your home.

Many of our customers have chosen to use the wealth in their homes to address specific needs that arise in retirement. For instance, Lynne is a 75-year-old retiree from Blacktown, found it difficult to finance her new car after her husband passed away. After contacting Household Capital, Lynne was able to unlock the wealth in her home and access the money she needed to purchase her new car. She also used her Household Loan to landscape her garden and establish a contingency fund for unexpected expenses, which provided her peace of mind.

Reflecting on her experience, she notes, “The way I looked at it, I’m only using the roof of my house, therefore, by the time I have to move out of my house, my kids will still own the four walls, and it still will only be the roof that I have borrowed and used.”

Want to know how much you could access? Get started by estimating your available home equity using our online calculator. This tool provides a reliable estimate, helping you plan your finances confidently as you unlock your home’s potential for retirement needs.

To learn more, be sure to check out more of our, customer stories, to learn how many more Australian’s just like you are experiencing financial freedom in retirement.