Should I Get a Novated Lease?

StonedWizard on 07/09/2019 - 10:00

I currently own my own car, it’s 4 years old and worth about $15k. I plan to keep it for another 3 years. I only drive about 8k on average. It currently costs me about $3k to run my car.

I have the option of doing a novated least through work and using their provider and a few others calculator It claims I’ll save about $2k - $3k a year.

I’m all for saving money but I’m just concerned any hidden costs would eat away at that.

Has anyone done a novated lease on a low income and found it worthwhile?

Financial

Comments

  • spackbace on 07/09/2019 - 10:12
    +1

    Leasing your current 4yo car? Or a new one? There's no way that leasing a new car will save you money, not on lower tax brackets

    • StonedWizard on 07/09/2019 - 10:25

      @Spackbace - I’m open to either.

  • Skramit on 07/09/2019 - 10:26
    +3

    No.

    Half the reason to get a novated lease is to buy a new car without GST. This obviously won’t apply to you.

    The other reason is a tax saving and unless you’re on 200k per annum it’s so minuscule that the risk of being locked in to a lease is far worse than the actual saving on tax IMO.

    I’ve done the sums a few times and have found the risks always outweighed the benefits for me. Coated lease co panties also wayyyyy over estimate the benefits from the quotes I’ve received. Eg they factor in $2000 per year for insurance, $2000 per year for tyres. Etc etc and for most normal drivers this is just silly.

    • 87percent on 07/09/2019 - 10:32
      +2

      Coated lease co panties also wayyyyy over estimate the benefits from the quotes I’ve received

      What??

      • Skramit on 07/09/2019 - 13:09
        +2

        Novated lease companies. haha iphone autocorrect.

      • [Deactivated] on 08/09/2019 - 21:51

        Coated lease co panties

        Not sure what that means but sound dirty 😳

    • CheapSticks on 07/09/2019 - 11:32

      Your scenario of $200k p.a. where the benefits kick-in…what sort of lease term did you consider in that..i read in forum that 1yr lease-term is better…not sure why though !

      Also, i understand the payments are pre-tax so naturally about $180k the benefit shud be material?

      • Skramit on 07/09/2019 - 13:10

        Nah I didnt mean 200k is when it kicks in. There's a small tax benefit even for somebody on say 100k. But the more tax you pay the bigger the benefit obviously.

    • [Deactivated] on 08/09/2019 - 21:49

      The other reason is a tax saving and unless you’re on 200k per annum

      And even then, you have to contend with the ATO's max allowable car tax threshold which is under $70k. Is that enough to buy a high yield investment car? I think not.

      There's at least one way you can circumvent that threshold but it's unlikely to apply to OP. My answer to your question would be not to bother with the novated lease.

  • empty456 on 07/09/2019 - 11:32
    +1

    I think it should have read "novated lease companies". Obviously autocorrected based on previously used words ;-)

    edit: meant to be in reply to supasaiyan's post above.

    • Skramit on 07/09/2019 - 13:11

      Yeah that

  • tsunamisurfer on 07/09/2019 - 12:34
    +2

    Using NL on anything but the top two tax brackets is not worth doing.

  • Halo375 on 07/09/2019 - 20:22
    +2

    You seem to have a perfectly fine car - stick with it and drive it to the end of its life. Novated lease makes no sense at all on a low income - even on a very high income the benefits aren’t as big as you’d think.

  • Ashbargin on 08/09/2019 - 08:52

    The key to novated leasing is a cheap car but higher running costs. If you are doing a lot of KMs and therefore higher running costs it can make sense. You are essentially paying tax on the value of the car and paying the running costs in pre tax $. The novated lease online calculators are always comparing to borrowing money and usually use car loan financing as the comparison rate. If you are paying cash or home loan rates this would be significantly less and there novated leasing will be difficult to put you in front.

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