How terrible is leasing a car for serviceability?

We have done the same with overestimating the K's & are in surplus. This will work out quite nicely! Thanks again.

 

Wow. As someone who was considering leasing, I'm so glad I read this. Thanks.

 

Creative idea @albanga - although it may appear in your YTD gross vs YTD taxable income balance differential though (depends on the payslip on how the breakdown is, some are more detailed than others). E.g. some payslips with no salary packaging has both written on it, equalling the same amounts given its all taxable.

If you have a lease you may change these numbers and it may be picked up by credit/broker. They may want an explanation, so it'd get factored into there as an ongoing repayment.

 

@Redom totally understand and best to know this before stuffing around making changes with your leasing company.

I know my company payslips are very simplistic. I guess that's one benefit to having a perm payroll program that was invented in the 20s. Haha

 

Ok, thanks Redom. Our payslips have YTD unfortunately!

 

A $1000 per month lease would knock about $200k from your borrowing cap.

 

Thats a big detriment when you are pushing the borrowing limits.

 

So what is the best method to use to purchase a car?

Use refinanced homeloan money?

 

Does the car need to be brand new? if not buy a cheap 2nd hand as you will be using it for work anyways, with the amount that you saved on a 2nd hand car it will have more than enough to pay for your on-going expenses without affecting your serviceability.

 

If you redraw you will end up with a mixed loan, but splitting the home loan and borrowing will probably be the best in terms of serviceability. Home loans generally have 30 year terms and the rate should be low.

Leases have short terms and therefore the monthly repayments high.

 

I'm testing this as I'm in the process of paying out my car lease so I can close the lease by the end of Feb. I think the lease impacted my serviceability in attempting to buy a second IP last year. Unfortunately I took out the lease about 5 months before I decided to invest in property. Aim is to refinance my PPOR (currently on 50/50 fixed/variable) after I come back from holidays in a few months time and then seek finance for a second IP.

 

Had this problem myself. An alternate option is to not take on any lease's until AFTER you have financed your investment. Once that is bedded down, the leasing finance companies are usually for more forgiving and may still accept your car lease request. There is plenty of $ in it for them at the higher interest rates + some comfort in knowing the employer will always (nearly) pay the required monthly repayment straight from your pay to them. May only want to lease for 2 - 3 yrs though. As soon as you take it on, you have ruled out any more borrowing from the bank until the lease is paid out.

Dont claim to be an expert. Just an interested observer.

 

We did the same thing. Got the car leases and then 5 months later decided that we were going to buy IP's. We owned one IP at the time and have acquired 2 more since the car leases. We're in the process of searching for our 4th. I guess we will soon find out our seviceability limit. Hope it's further down the line!

 

@Tim86 don't do it! Don't do it! (if you haven't already got that message from the other posts)

We have just been through this with our mortgage broker @Peter_Tersteeg - my husband's novated lease was a pain in the @ss for our latest purchase. That and complicated pay slips, ugh!

We considered paying out the novated lease loan out early ($38K) to gain the extra amount in serviceability (never quantified the actual amount of gain, perhaps between $100-200K). But got close to what we needed in the end from the bank, so didn't pursue.

Was not a good position to be in.

Moral of the story - do a PC/SS search before making any financial decisions lol