Cars & Motorbikes Novated Vehicle leases

Discussion in 'Living Room' started by Redwing, 16th Apr, 2018.

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  1. hammer

    hammer Well-Known Member

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    We looked at it when we bought our car.

    For us it was cheaper to get a ye Olde car loan at 6 percent rather than pay all the fees and an interest rate of 12 percent.

    Even with all the tax breaks.

    Plus we had the option of paying the loan out quickly. Which we did.

    Financially - cars suck.
     
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  2. therealAusting

    therealAusting Well-Known Member

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    What about leasing back your own car to save on repairs and running expenses?
    Pre Tax (salary sacrifice) fuel and repairs and no overpriced loan. I have to go through Maxia.
     
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  3. Redwing

    Redwing Well-Known Member

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    We purchased our last vehicle outright with the 5 Year Free Scheduled Servicing Plan
     
  4. Alwayslearning

    Alwayslearning Active Member

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    Depending on financier, they can be denovated fairly simply, so just goes back to a finance lease and running costs are washed up.
     
  5. Alwayslearning

    Alwayslearning Active Member

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    Worth noting that different providers work using different mechanisms.
    Conservative balloons = higher rental & vice versa.
    Some providers use actual running costs, some shade them and recommend restructure in life.
    Employers with low lease volume might not receive best fee/interest rate structure.
    Some nefarious providers include junk insurance.

    Ask directly for interest rates and fees, confirm no junk warranty/insurance included.
    (they may try and dodge the first two times you ask :) )

    Edit: Forgot to add - some employers see the benefit as an income stream and expect a rebate. You know where that cost is going !
     
    Last edited: 22nd Apr, 2018
  6. Alwayslearning

    Alwayslearning Active Member

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    It's possible, however they will most likely use a slightly higher used car interest rate depending on age.
     
  7. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    I've done both and leasing was quite beneficial at the time for me.

    Pros
    - cheaper buy in (ex gst and corporate buying rate) meant the car was about $10k under RRP
    - servicing was at fleet rates which OMG were an eye opener for the rip off normal rates.
    - I was in a high tax bracket and my out of pocket was cheaper than

    Cons
    - only made sense for a new vehicle. Doing the sums didn't work for a second hand as there was no fleet discount and gst discount.
    - if you didn't choose a popular vehicle then there was no opportunity to make a profit at end. I chose a Mazda CX-9 which devalued slowly

    Now that I have my own ABN and company I drive a company ute for similar gst, fleet and FBT benefits.
     
  8. Owlet

    Owlet Well-Known Member

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    Why doesn't the gov stop this tax reduction scheme? Why is NG and CGT under scrutiny?
     
  9. therealAusting

    therealAusting Well-Known Member

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    Just got off the phone from Maxia.
    Below is my best recollection of the call. Sending this from iPhone as usual so please forgive typos.
    1. Apparently you get a car at 'fleet rate' if buying new and don't have to pay GST. She also said Pickles offer a discount but said it varied depending on the car and what week your were to buy it. She couldn't give actual examples of any discount though.
    2. The car must not be older than 10years at the end of the lease.
    3. 10.4 percent through maquarie is the Loan rate. THERE IS ALSO A $$480 loan establishment fee from Maquarie.
    Maxia also charges $30 per week or fortnight (forgot which) to administer this. So if fortnight somewhere around $780 per year.

    The fees seem rather high to me. Might be ok if you were going to borrow to pay for a car. I think I will be sticking with my old car for a while longer depending if I can actually work out how I would save money by leasing a $15 to $25k used car over keeping my old jalopy.
     
    Last edited: 23rd Apr, 2018
  10. Scott No Mates

    Scott No Mates Well-Known Member

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    This does not relate to where, how often or who can service the car but impacts on your borrowing capacity for investment or home ownership.

    Oil lobby is too strong. Get rid of incentives on car ownership for business will lead to greater utilisation of public transport - how ridiculous is it to lower the fbt payable based on how many km travelled (regardless of purpose)? Where are the incentives for riding a $10k bicycle or catching the train? No one else gets this lurk so why should motorists? Even catching a cab to appointments is fine.
     
    Last edited: 23rd Apr, 2018
  11. craigc

    craigc Well-Known Member

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    The km travelled hasn’t changed the FBT rate for a number of years. All standard 20% rate of FBT value now less employees after-tax contributions.

    Can work better if you are changing employers & new one also does novated leasing.
    Ie Buy new car $50k, move to new employer & car is revalued to market value (now used) say $40k for FBT and FBT now calculated on $40k saving you some $.
    Although all other factors need to be considered & also serviceability impact as brokers have mentioned above.
     
  12. therealAusting

    therealAusting Well-Known Member

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    Well I at least worked out how to replace my old Jalopy for about the same weekly cost.
    Current Jalopy quite old and costs about $140 per week to keep on the road.
    Fuel $80, Rego and Green slip $20, tyres and repairs $20 (this is up and down but close enough as the car is quite old), full insurance $20 (I think).
    To Lease a 4 year old car through Maxia via my employer works out at an all up $281 fortnight Camry or $289 fortnight Commodore. So about $145 week or roughly the same cost as running the jalopy.
    I priced this on a 3 year lease a 4 or 5 year lease is a bit less cost.
    I spend 2 to 2.5hours a day commuting and intend on using the time to listen to books and maybe learn a language. Not sure what electronics I will need in the car for this though. What do you guys use?

    iPhone sorry for the typos
     
    Last edited: 2nd May, 2018
  13. geoffw

    geoffw Moderator Staff Member

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    If it's a newer model car, it will have Bluetooth, and you can communicate with your car radio directly. If it's an older car, you may need a Bluetooth speaker. The cheapest ones are about $20.

    If you don't have a hands free for you can get a cheap one from KMart which clips onto an air vent. Also get yourself a lighter charger from the same place, a double one if you need a separate Bluetooth speaker.
     
  14. PandS

    PandS Well-Known Member

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    It basically comes down to this

    1. If you got the cash, pay for it and it works out better
    2. if you have to finance the car through borrowing then leasing is better at 40% tax bracket or above

    Most don't have the cash so the next best thing is lease
     
  15. chylld

    chylld Well-Known Member

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    I would go a step further. Only buy a car with cash, as well as in conjunction with investments that generate enough return to offset both running costs and depreciation.

    For example, my Lotus depreciates about $650/mth (based on Redbook historic values) and costs about $500 a month in fuel insurance rego upgrades etc. This is about $14k a year, so at say an 8% investment return you would need a portfolio of around $170k to offset it. In the end I spent almost double the sticker price in order to get the car without harming my balance sheet :D
     
  16. therealAusting

    therealAusting Well-Known Member

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    Re-read through this old thread and thought I'd resurrect it.

    Bunkai - ho do I convince Maxxia , the provider In have to use:( let me lease a classic Maserati? They have a rule of no more than 10 years old at end of lease..