Hi OzBargain people.
I am a first car buyer trying to buy a just normal economical second hand car. But the second hand car price is a joke these days. I wouldn't buy something like over 150,000km with wovi/written off history at $10,000 to $15,000. What a scam.
So I am thinking of getting a car with Smart Leasing with my salary packaging service. My salary packaging company is AccessPay and they provide around $15,000 per year.
Please give me some pros and cons!
I am new to this thing :(
If it's paid before tax rather than after tax it can wind up substantially cheaper
I have a $51k EV, but the total cost is about $54k out of pocket for me over 5 years (including insurance, rego, maintenance, financial, tyres, etc, all costs involved in having the car).
Comparison wound up being similar to buying a $25k car instead, which doesn't get you much on the used market these days.
What interest rate did they put you on?
What's the procurement fee? What's the monthy account fee? Have you spoken to an accountant to see if it in beneficial? Are you going to be staying in the same job for 5 Years?……
@fredz0r: I bought the car myself, monthly account fee is minimal because they make a kickback on the interest (it's disclosed in the statement, they make about $4k), I am an accountant so I ran the numbers myself and it certainly was, staying in the same job isn't super important as they can be transferred to another lease provider in most circumstances. I got reamed on the insurance in year one because I used the lease provider insurance just because it's easier - I'll switch and save some money next year.
No one should just blindly sign up to it, but the benefits are there. Also don't believe what the lease company says is the savings, according to them I've saving a bajillion dollars. But it doesn't take into account fees, the higher interest rate and the cost of letting them supply anything over sourcing it myself.
Looks like whatever his marginal tax rate is. I suspect somewhere between 30 - 45% to pay for all those costs.
@netjock: https://www.toyotafleetmanagement.com.au/novated-lease/novat…
Around 9%, 5 years, $190k income, I can get the total cost to around $54k over 5 years
All things being equal, change the vehicle to a hatch (petrol), and cost over 5 years becomes $86,220
@spackbace: But if you are on $190k once stage 3 tax cuts come in you got $9k a year for a car. Over 5 years that is $45k plus you keep the car. But then that is just me.
@spackbace: Forgive my beginner question, but why does changing to a hatch bump the price up so much?
It's about 9%. Which sucks, but I was locked into a sole provider so it was basically "suck it up".
edit: Checked, it's 9.13%
how much will it cost you to buy the car when you're done renting it?
Forgot to mention the $54k includes the $14k balloon payment.
So in theory I could just do a new novated lease at that $14k value, if the government still does them FBT free I probably will (or I'll sell it and start over, it'll probably be worth over $14k still unless EVs get a hell of a lot cheaper over the next 5 years).
@freefall101: So after paying $40k to rent it, you get to buy a car with 120k km for $14k, which is what OP was turning his nose up at.
What if you get the boot or resign
In before EV FBT free comment.
You're financial logic doesn't stack up.
A novated lease car is really only a benefit if you can't pay for a car outright (and you're falling into the highest tax bracket).
The only reason you'd do it is so you don't have to externally finance oh and if you're getting an EV.
The finance rates novated lease companies provide are extortionate and are literally taking taxpayer money and lining their pockets with it.
The finance rates novated lease companies provide are extortionate and are literally taking taxpayer money and lining their pockets with it.
LOL out of sight out of mind
Give me my stage 3 tax cut (not that I get that much of it) and make them pay!
A novated lease car is really only a benefit if you can't pay for a car outright (and you're falling into the highest tax bracket).
This is not entirely true but yes most of the time it would cost less overall if you bought the car outright. But if it costs a little bit more it would be better on the NL as you would be using future wages to fund this car instead of being out of pocket a lump sum. Plus the running expenses can be funded tax free vs using after tax. Misconception with the you need to be in the highest tax bracket, you don't need to be. If you need a car, it's another great way to compare car buying with cash vs NL vs funds from offset account vs car loan (which is always the most expensive option)
The finance rates novated lease companies provide are extortionate and are literally taking taxpayer money and lining their pockets with it.
The finance rates are higher but this is why it is only a salary sacrifice benefit. You can't just get a NL if you are not salary sacrificing, is not possible. It will depends on the costs and savings involve + running expenses to determine what is better in ones circumstance. I admit it's not for everyone, but if the numbers are right it's a win win for all and I help people compare their options and if it doesn't work out then I say so. It really can be a good alternative to traditional car buying. But yes there are too many crazy sales people that focuses on promoting the savings and not act on the best interest of the consumer.
I think if you're buying an EV the leasing options have become more attractive as the government has changed the laws
otherwise unless you're a 'very' high income earner/s the leasing options have 'never' really stacked up for me - it is very much 'depends' on your personal tax situation and driving habits
I work in this industry (15years+) and deal with Smart on a third party basis
If you have an alternative option to Smart Leasing, I'll probably get a quote from them because one thing Smart is good at is ripping people off and bad customer service
I think they're all as bad as each other.
You are not wrong but it's hard to also pick one with decent customer service. It's just choosing between a turd and a douche.
All the providers that are listed on the stock exchange wouldn't care who they offend and won't even discount anything unless you know your stuff.
So to the average consumer it's hard
Given your extensive experience with NL, is interest rate of 9-10% decent in this climate?
For an EV, what would be the best/most beneficial length of NL: 1, 2 or 3 yrs?
Would the same interest rate be applied for different length of lease as above?
The rate depends on who the NL provider uses as the financer or their own finance. Some set rates based on amount finance and some based on length of lease
To be honest don't even bother to look at the rate it's not even a good comparison. A loan or mortgage atleast the internet rate you can calculate interest owing but NL it uses a complex formula that you can't calculate yourself and also some NL add on commission based insurance/extras that they don't bump the rate up but cost you more in lease payments. So interest rate in a NL is not a good compare. Best thing to do is get / compare is the monthly repayment finance only.
There is no one set length suitable for everyone. But you are comfortable at your current financial situation or you are in a high staff turn over industry and want to own the EV outside NL asap then do one year lease and re-lease with a couple of one year leases afterwards to bring the residue down
If you have a stable job and don't intent to change jobs soon and don't like doing paperwork. Do a longer term 3-5year and then assess your intentions few months before end of lease
Leasing locks you in. It’s more difficult if your situation changes and you want a different car. You’ll generally need to spend more because you can’t lease an older car. There’s a residual payment at the end you need to find, or roll over into a new lease.
Just buy a $10-15k used car. There’s plenty out there.
I had a $30k car on a NL from 2008-2012 (and then bought it outright for $11k). I know the rules have changed since then but at the time I was on $75k and there was only $2500/yr tax advantage and I had to do 25k km/yr.
I'm not sure where you are looking for 2nd hand cars but prices are normalising to pre-covid levels.
I'm in Sydney and bought a clean MY18 Golf Alltrack 1.8tsi DSG with 53k km this week from a dealership for $23.5k.
Could have got something slightly smaller, older and double the km for $15k and it would have been a good serviceable car but the partner found a bit more money to spend and she liked the VW. Agree though, there are a lot of dogs around $10k.
I have been researching a bit to see if it makes sense. If you want an ev or hybrid car it makes sense according to my calculations (and they are all $40k plus).
Let’s assume you buy a $40k car and keep it 15 years. If you have a mortgage you are not offsetting those 40ks hence that’s about $30k over 15 years. Running costs let’s say 4k a year=60k over 15. Plus the cost of the car which is 40k =$130k over 15 years and by then the car won’t be worth much.
I put in calculator with Smartsalary for a Byd Dolphin (just under $40k) and running costs is $321 a forth-night. Over 15 years (just imaging it here) it’s $125k including all expenses (I put 5k a year as I imagine charging car home is very cheap and not claimable but you can claim if using the fast street chargers, rego, insurance, maintenance). Of course things could change in the meantime, but in the meantime you can start off with 5 years. There is no lease for 15 years, but I’m imagining this scenario.
I’m not considering the residual value, but I would imagine at the end of the 5 years you can sell (I’m pretty sure you’ll get more than the residual value).
You also get a brand new car every 5 years.
I’m not considering the money you are paying every year in the offsetting of the mortgage (sorry not that good at maths lol.) I’m also assuming rates are hovering around current situation.
So rather than own a cheaper car, you'd rather finance a more expensive car?
Also:
https://www.ozbargain.com.au/search/node/Novated%20Lease%20t…
Plenty of reading if you had searched