Best way to finance a new vehicle used primarily for work

Just wondering what you guys think would be the best way for me to purchase a new car, in terms of the best tax benefit, but also have the least effect on our finances in terms of future loan borrowing capacity / serviceability.
I've always run very cheap but reliable old runarounds for work, which of course have no depreciation to claim, but I'm finally thinking of getting behind the wheel of something more modern and safer since I spend most of my time on the road.

This is my situation:
- I'm always on the road for work, driving to and from client sites.
- I average about 25,000km a year
- budget is $30,000-40,000

I have the funds available in home loan offset account ready to buy the car outright, but I want to a better way for me to go about this.
Novated lease sounds good but I don't like the idea of it potentially affecting my loan serviceability for future investment loans.

Appreciate any input as vehicle finance / leasing is all new to me, I've always owned my cars outright.

Thanks.

 

Best way would be to split the loan and then borrow to acquire the care.

Low interest rates, less effect on servicing.

 

Sorry I actually meant funds available in the offset account, accidentally said redraw.
Will edit my original post.

Should I still transfer from the offset account into the loan to create redraw, and then split the loan?

 

I don't know your circumstances but it may be a good idea to pay down the loan and borrow for the car rather than using cash for it.

 

A novated lease might be tax effective in many ways, but it will be a disaster on your serviceability. Avoid this if you intend to borrow more money in the future.

Split off part of your existing home loan to represent the cost of the car. Use some money from the offset account to pay down that split so only $100 is owing (this is so the bank doesn't automatically close the loan if you pay it off). Then redraw the money from the split to pay for the car.

By splitting the home loan, you've made a clear definition between money borrowed for your home and money borrowed for the car. Interest on the car portion should now be tax deductible in line with your accountants advice.

 

Whatever you do don't do a novated lease! We have 2 novated lease vehicles. It has made a significant dent in our serviceability and we wish we hadn't done it. At the time we took up the leases we were not thinking about investing in property. A few months later after reading some property books we were buying properties. We are now stuck at 4 properties trying to break through the lending and serviceability wall to continue with our investment plans. 4 properties is nothing to sneeze at but is certainly no where near our end goal! Sometimes life changes, as the brokers have recommended pick the option with the most financial flexibility.

 

Thanks @Peter_Tersteeg
This sounds like the best approach.

Exactly my thoughts @Magnet.
Have now decided that novated lease is out of the question, especially with lending tightening up in recent times, I don't want a car to hinder us from purchasing our next IP, whenever that may be.

 

Would a novated lease negatively affect serviceability if you receive a car allowance to cover the payments?

What if the car allowance is higher than the payments, eg. allowance of $20k and novated lease of $15k? In reality you are $5k CF+ but do the lenders calcs see it as negative still?

 

yes and yes