Novated Lease quote comparison - let me help you decide

Basically my background is licenced financial adviser specialising in novated leasing (10 years). I know all the tricks of the trade and all the dodgy stuff that happens in this industry.

I'm offering a service for those who have already got a quote or two from their employer's novated lease provider and going to proceed either way but not sure if they are getting a good deal.

I can help you compare the quotes and probably would be able to help you save hundred to few thousand dollars with what I know

General questions I could probably answer on the forum comments, complex questions you can pm me.

Mod note: Solicitation of payment for services is not allowed.

Comments

  • +6 votes

    Q: how to save money on a novated lease?
    A: don't get one, pay cash or get a loan for the remaining amount after using your savings to pay as much as you can

    • +2 votes

      It is more complicated than that because although you are borrowing, you pay some money out of pre-tax income and avoid certain other taxes.

      So it really depends heavily on your exact usage pattern and tax situation.

      (But I cant even work out whether it is worth it for me)

      •  

        happy to have a look if you got quotes and the method of car buying if you were not doing a NL to compare

      •  

        I think it would only be close if you had no savings (remember with a novated lease you are paying interest on the balloon the entire term) and like you said, incredibly heavy use to knock down your income by as much as possible. Plus you'd want to be in a high tax bracket.

  • +1 vote

    I've looked at getting a lease numerous times but it seems to be only worthwhile (versus using cash) if I do heaps of KMs or buy an expensive car. Is this generally the case?

    •  

      The expensive car is definitely not the case especially when you get into depreciation cap limit and luxury car tax territory. Most cars I deal with are between $20k to $50k and done deals where clients drive only few thousand kms a year.

      Sometimes you can beat cash sometimes you can't. Sometimes people don't have cash and sometimes people like to use future money instead of existing money. So really depends on one's circumstance. PM me your quotes if you want me to compare.

      • +4 votes

        Is there a decent online calculator I can use? They all seem to conveniently hide the details and just show how much you'll "save".

        •  

          afraid not. they all like to hide behind a smoke screen.

          but what you can do is calculate the cost of the purchase price + running expenses (use the same as the quote but make sure it's including GST. Most providers do ex GST on the running expenses because you don't need to pay GST on the expenses for the NL) for the lease term

          vs

          the decrease the take home pay on the quote for the lease term + residual payable

          This way you would know if it can beat cash or not beat cash by how much

          NL will beat car loans and personal loans hands down if the lease term gets completed.

          The other comparison is vs draw down on a mortgage if that is applicable

  • +3 votes

    Can i novated lease an e-scooter?

  • +6 votes

    Are you on here touting for business? Like a spam post
    Cant you be reported to ASIC and lose your license for providing financial advice without doing a proper risk assessment and individual analysis?

    I reckon this makes you look dodgy, youve already done an AMA on this subject
    https://www.ozbargain.com.au/node/447589

    Plus you even posted on here asking for financial advice or were you selling that too?
    https://www.ozbargain.com.au/node/447878

    •  

      I'm not providing financial advice… that stuff is too expensive for the general population.

      In order to be financial advice or any sort of contract there needs to be commitment from all parties.

      What are you trying to gain shitting all over my post?

    • +6 votes

      Sounds like an interesting tactic for OP to sus out quotes of competitors and drum up sales through PM via our OzBargain community……….

    • +2 votes

      "I wouldn't mind some grocery money in return :)"

      Looks like touting to me.

    • -1 vote

      Not sure what you are trying to achieve here. It's a forum post and those who are looking at Novated Lease will find it useful, get some questions answered. It depends on personal circumstances (your tax bracket, how much cash you have, how you use car) like OP suggested so if you're a cash cow you are likely to have no intetest in this, if you pay for a car in cash then there is no interest involved, making it look like a 'better' deal than a Novated lease.

      I personally would find this forum topic interesting 2 years ago if I have not engaged my current financial advisor

      Ps: as much as the general public hate them, financial advisors look for client for a living. You can see this as a spam and OP is not expecting you to pay for this advice. People who get it will get it

  • +1 vote

    With leasing you still pay personal loan rates, so can't see how be much better off than tacking onto low rate home loan and increasing repayments?
    You get insurance, servicing and fuel (largest cost) pre-tax but you also get the fees for salary packaging. Supposedly the package companies can buy cars at better prices so that may even it a bit, but unless you moving into new lease you need pay residual payments at end of lease. Whereas you can pay a car off in 3-4yrs and own it outright.

    • +1 vote

      NL interest rates are actually not the same as regular loan rates

      It's quite complex and I personally won't trust it besides from looking at the actually monthly lease payment itself.

      I would say add on a couple more % on top of the NL rate.

      Residual is always there at the end of the lease… it is the estimate capital to pay out the car handed down as a percentage by the ATO. I don't see why people are so concerned about a residual when you pay that at the end but with a loan you pay it throughout the term. I guess most people are shocked because they can't handle money and don't have enough to pay the residual at the end. E.g. loan $1000 each year for 5 years compared to $500 for 4 years and then $3000 in the last year. By the way you can re-lease the residual at the end and that residual actually goes down for the new lease term (e.g. by 55% if you re-lease 1 year). If you re-finance on a loan, you pay your repayments based on that payout amount.

      you really need to compare the NL quote vs other method of buying. NL not for everyone but it beats a car loan for sure. Cash and mortgage vs NL will need to be compared to know.

      NL product wouldn't be offered if there are no advantages

  • +1 vote

    My employer offers Novated Leases with Maxxia. From what I can see it lures people into cars they can't really afford which probably helps with staff retention.
    What do you think of Maxxia?
    They don't seem to get the discounts for customers they should from what I've seen but I could be wrong on that score.

    •  

      They are kind of scummy but if you don't work for the government. Employer should offer you 2 providers to avoid exclusive dealings which is illegal in Australia.

      Car buying you quote them out and then just go to another dealer… anything around the redbook price would be nice but depends on the brand

      If you are serious about getting into a NL that's when I can offer you tips using your own providers to get a better deal

      •  

        My employer only uses one provider, can you point me to something official about this not being legal?

        •  

          ACCC read up on exclusive dealings. Third line forcing would be the one.

          Government and exempt organisation are not captured under this

    •  

      I'll tell you what I think of Maxxia, avoid at all cost. I have a lease with them currently and they've been nothing but incompetent since day one. Rejecting claims due to balance despite having more than enough credit, stating they've paid claims but never actually deposit the money in your account, slow to process any enquiry, do nothing with your employers contribution for two weeks before crediting it to your lease. Will never use them again.

    •  

      I got my lease for the Skoda with Maxxia back in 2008. They were easy to deal with and didn't stuff things up.

      Their vehicle discounts weren't great so I organised my own deal. 2007 Octavia Elegence hatch 1.8tsi M6 for $30k drive away which was about 45k off RRP.
      I did a 1yr lease (because I wasn't sure if the car would be a POS). Then followed up with 2 yrs, then another 1. Initially I saved about $2k off my tax ($70k income) and a lot on fuel as I was doing 25k/pa. By the 4th year it was only a few hundred and Yr5 would have been <$100 so I bought the car for ~$9k.

      I still have the car.

      The biggest difference I see is that it got me into a new car when I would normally buy 2nd hand 3-5 yrs old.

      I probably wouldn't do it again as employment seems so unstable these days and I wouldn't like to be unemployed and stuck with a novated lease.

  •  

    I'm currently in the market for a NL. I'm eligible with a number of companies. Can you give us an honest opinion of who you can recommend and why?

    •  

      I haven't really met any NL providers that provides exceptional service (besides from myself lol) but if from pricing perspective Toyota Fleet Management in novated leases (you don't have to buy a Toyota) probably cheapest because their finance is from Japan and Japan is currently in negative interest rate. Banks actually charge the government and citizens to keep money with them so their NL can be cheap if you know how to negotiate. Not sure about service but as long as they set it up correct at the start it can't be that bad. If you get a quote from them, I could help you improve it before you commit.

  •  

    Improve it how? By adjusting the standard quote they give everyone. This will be my third novated lease. I've kinda figured out they sting you by adding ridiculous things like tyre changes every 12 months or wheel gutter protection crap. Is that what you're talking about? And how much can you actually haggle with NL for the best interest via bank?

  •  

    can you provide an example of a NL?

    e.g. 2019 toyota camry through ABC lease company would result in payments of X per week/month and final residual of Y. and any associated costs.

  • +1 vote

    I am considering getting a Hyundai Kona EV on a novated lease. Basically, the savings on GST (and not paying for fuel!) as well as discounted lease financing from Macquarie Finance (0.7% below standard, through a deal with the Renewable Energy Finance Corporation). I do lots of kilometers per year (35k-40K)

    what are your thoughts?

    •  

      You know you do pay for fuel right?

      •  

        Probably will be charging up at home and can't claim the electricity

        •  

          Oh right….you'd think you'd be worse off than paying cash then since the fuel isn't decreasing your taxable income. It would basically be a loan with a higher interest rate than a normal car loan where you can't pay it back early. You only save with a NL if you can do enough km to decrease your taxable income enough to offset the fees and higher interest rate, and you don't otherwise have any savings that could have gone into it

      •  

        got solar and battery at home, and can charge at my work if it comes to it. Don't plan to pay for electricity.

    • +1 vote

      If the purchase price was a bargain it might work but EV cars at the moment don't resale very well. If you are planning to keep for good then it can work out.

      MACQ is the go to financier when people can't obtain finance. They approve anythung. Sometimes good lease repayments but not the best atm, deadly on fees if somehow they don't get their $

      Should work out if your NL provider do it right

  •  

    My situation is this. I've come into a reasonable amount of money. I'm shopping for a car around $40,000 second hand which shouldn't depreciate too much further. I could just buy it with cash, but figured I could lease it and gain the tax benefits, then after the 2 year lease pay the balloon. I liked the idea of keeping the lump sum of cash in my account rather then spending it all straight up. I work for the government and Smartleasing seems to be the exclusive company. I won't be doing huge amounts of kilometres, probably between 5000 and 10000 a year. The car is very heavy on fuel and tyre usage though, the tyres are expensive.

    Does this all sound like it'd be worthwhile for me?

    •  

      I liked the idea of keeping the lump sum of cash in my account rather then spending it all straight up.

      The interest rate on the NL is going to be loads higher than any savings account

      •  

        I get that and the interest earning potential when holding onto the cash isn't the main reason. Getting on a lease I get GST from a dealer sale refunded, It'd also drop my taxable income, no tax on fuel, tyres, servicing, rego and insurance.

        •  

          plus, dropping my taxable income gets me in the income bracket to take up Labor's offer of another solar battery.

    •  

      it can be but the information is very general

      so next thing to do is get a quote from them and compare (don't be pressured to go ahead, their sales are pushy)

  • +1 vote

    What do you think of Lease Plus ?

  • +2 votes

    Not this guy again..

  • +1 vote

    OP, why NL and not an Associate Lease?

  •  

    I have been thinking of getting a McLaren on a NL for a little while now as a family member had purchased an Audi with it and said it was more financially beneficially because of some tax workarounds. Honestly, I’m not too sure how it would work, as it makes much more sense in my head to get it in cash. I’m assuming if I increase the balloon payment at the end, it would decrease the loan repayment I’d make and then I could just trade in to the latest sports car at the time after the 5 years?

    Could you provide some insight on how using a NL could work out cheaper (if it would), included tax reductions and whatnot, if I just wanted to have a ‘fun car’ on the side to keep upgrading? Or could you just explain how it works out cheaper at all?

    Thanks

  •  

    IS there any specific brand which is a top choice for leases for a $40k vehicle? i.e good resale, reliability etc or is it mainly dependent on the customers choice?

    Whats a typical p/m payment on a lease for a $40k vehicle? (guessing too many factors to really quote it?)

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