Opinions on Remserv Car Novated Lease?

Ltsururu on 23/10/2020 - 18:44
Last edited 23/10/2020 - 18:56 by 1 other user

Hi,

First-time poster here.

I would appreciate everyone's opinion before going nuclear at Remserv.
I had previously leased a car with Remserv, novated leasing. The car was $40000, 3 years ago.
I have recently finished my government job and the people who I work for now doesn't do remserv or salary packaging.
So I took over the loan from Remserv.
It was a St George's car loan at 8% p.a (I know right…..). But to my surprise I found out my opening loan balance was $58000!

I called St George and they said it was Remserv Novated Lease that asked for that amount.
Remserv Novate Lease then tried to explain to me that the additional money was interest!?
I have been making regular fortnightly re-payments for the past 2 years. So unless Remserv just did simple interest calculation for 40000 at 8 p.a over 5 years and not taken into account of any repayments at all, I don't know how they got to that figure.

Am I going crazy or is this how Novated Lease works or makes money? If so, that is a crazy amount of money for a government worker benefit.

• 

  oscargamer on 23/10/2020 - 18:46

  Get a printout from Remserv, then come back here.

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  tsururu on 23/10/2020 - 19:06

  I did call Remserv and St George.

  https://files.ozbargain.com.au/upload/370632/83879/picture1.…

  I guess the numbers work out after adding the residual value…….

  But hopefully, this serves as a warning to people thinking about novated lease with Remserv….didn't even save that much tax money, 1000 dollars per year over the last 2 years…totally not worth it.

  Btw, putting the numbers into online calculators with that ridiculous interest rate, the residual value did not help offset the monthly repayment at all

  • 

    Seraphin7 on 23/10/2020 - 19:28

    +2

    This doesn't seem to add up.

    You're saying you've been paying a lease for three years, presumably at $805.66 per month?

    From what this shows it suggests your contract is to pay 58(?) instalments of $805.66 per month with a $12,726.01 residual? That ads up to $59,454.29. Close enough to the $58k you're quoting or just co-incidence?

    Are you now saying that after three years, the lessor is suggesting the amount still outstanding on your contract is $58k? That makes no sense at all.

    Maybe it's me, but it sounds like there's something missing here?

    • 

      tsururu on 23/10/2020 - 19:47

      Sorry I didn't clarify.

      The 58000 was the opening loan amount back 2 years ago. So Remserv opened an loan account on my behalf with St George for a 40000 car but with 58000 loan.

      I didn't notice this because I never had to check the St George loan account.

      The math to me still doesn't add up though.

      Is this how banks usually do residual value? They add whatever they think your car is worth by the end of the loan and then add it to the amount you borrowed + interest? e.g. 45885 (loan + interest) + 12726 (residual value) = 58611 ?

      The exact opening amount is $58,297.38

      • 

        Settero on 23/10/2020 - 20:22

        does a novated lease not cover all the running costs as well ?

        the residual value is what they expect the car to be valued at , at the end of the lease, why would they have you pay for that , that's how much they expect to sell the car for if you do not buy it.

        you need to look at your paperwork.

        • 

          salmon123 on 23/10/2020 - 20:39

          @Settero:

          the residual value is what they expect the car to be valued at , at the end of the lease, why would they have you pay for that , that's how much they expect to sell the car for if you do not buy it.

          The residual value is always set slightly lower than the market value of the car. You only pay the residual if you want to acquire the car at the end of the lease. If you don't want to pay it, you can hand the car back.

          does a novated lease not cover all the running costs as well ?

          Yes - but when you're trying to break a lease, you only need to settle up for the finance portion. Running costs aren't financed.

      • 

        salmon123 on 23/10/2020 - 20:33

        The 58000 was the opening loan amount back 2 years ago

        No - it wasn't.

        According to your screenshot and some simple calculations, the amount financed was ~$41127.

        You're suppose to pay $59454 inc gst over 5 years (including a residual of $12726). I don't know what $58000 is or where it comes from.

        If you're already 2 years into the loan, the most you'll have pay to settle up is: $805.11 * 36 + $12726 = $41709.96. It should be slightly less than this though, because they'll give you a break on the interest, but then pad it out with break fees.

        It was a St George's car loan at 8% p.a

        Actually, your interest rate is closer to 10%. It's funny how they can lie straight up to you during the negotiations and not put the interest rate anywhere in the contract.

        • 

          tsururu on 23/10/2020 - 20:43

          @salmon123: https://files.ozbargain.com.au/upload/370632/83881/aaa.png

          The actual number they said to me at that time was "a very competitive rate"……

          So the above is my current account balance with St George.

          The amount in the contract was 40000 ( can't post it cos got personal details on it)

          So even if the amount financed was $41127, the overall cost of the 5-year loan is $59454? Is that what a standard car lease/loan is like?

          • 

            salmon123 on 23/10/2020 - 20:49

            @tsururu:

            So the above is my current account balance with St George.

            Cool - the 58k figure is probably due to some quirk around the fact you're making 58 payments instead of 60. Your payout figure should be pretty close to the 30k balance showing at the end. It looks like you have ~21 months left on the lease.

            The amount in the contract was 40000

            That's the purchase price of the car.

            So even if the amount financed was $41127

            They've padded the financed amount with 3-4k worth of fees.

            the overall cost of the 5-year loan is $59454?

            Yes, but for the 2 years you were salary sacrificing the car, some of the money came from pre-tax dollars. You should've also saved some gst.

            Is that what a standard car lease/loan is like?

            It's not the worst deal in the world. I've seen novated lease quotes with 5-10k worth of fees padded into the financed amount and interest rates >15%.

            Did you actually save any money, compared to taking money from a mortgage offset account? Probably not.

            • 

              tsururu on 23/10/2020 - 21:04

              @salmon123: Ya that is what I figured, not saving any money at all.

              Just want to get some idea from the forum to see if this is usual before calling Remserv again on Monday. Dont really want to be mean to them over the phone, but can't help it if they blatantly lie.

              • 

                salmon123 on 23/10/2020 - 21:15

                @tsururu:

                Dont really want to be mean to them over the phone, but can't help it if they blatantly lie.

                Probably a waste of time calling them out on the lie. Just try to figure out the various components of settling up.

                If you have access to the loan details directly, there should be an option for you to sever ties with remserve and deal with st george directly.

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  avoidfullprice on 23/10/2020 - 22:02

  https://files.ozbargain.com.au/upload/370632/83879/picture1.…

  https://files.ozbargain.com.au/upload/370632/83881/aaa.png

  Looks about right if that is just the lease component and no fuel and other packaged element.

  58 x installments (Inc GST) + 5th year residual (ext gst) + unknown FBT shortfall amount = st George opening balance? No idea. Maybe they recalculated using the 3rd year residual figure.

  However it looks like you are about to cover your old lease with pre tax benefit using an after tax loan. Expensive early termination by looks of it?

  • 

    salmon123 on 23/10/2020 - 23:54

    unknown FBT shortfall amount

    St George doesn't know anything about FBT. Remserve deals with that. There should be a FBT shortfall.

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  petebern on 24/10/2020 - 19:16

  +2

  I have had many Novated Leases in the past but have never had a maintained lease because I preferred to have control over my own costs. That being said, it appears as if they have calculated your monthly costs @ $300 and multiplied by 60 to arrive @ $18k plus the $40k for the car and asked for the full $58k up front from StGeorge. They then give $40k to the car company for the car and use your $18k over the next 5 years to pay your fuel/service/insurance/fbt etc. based on the number of klm you promised to do per year. The residual value is a requirement from the govt to be between 30-40% for the first time through - they can reduce this if you re-lease the car for a further few years. In the 5th year, for fbt purposes you can write down the value of the car by 30% i.e. years 1-4 fbt is charged on $40k but year 5 is on $28k. They should have explained this @ the beginning but it seems unlikely they did.

  Now that you want out, it would depend on their documentation as to how monies are refunded to you. If you finish the agreement 3 years early, they should refund you $300 by 36 less some fee for the refund say 10% so $9720 which you can use to pay out the balance of the loan plus residual - $30676 plus $12726. You should get a discount from StGeorge for paying out early. So how much it costs you is dependant on the early termination conditions from RemServ - technically they have taken money from you for future services/fuel/fbt etc that won’t be due as the agreement will be terminated. I hope I’m wrong but, from my experience, it is not a good experience to get out of these deals early as everyone wants their pound of flesh…

  • 

    tsururu on 25/10/2020 - 11:50

    Thank you, that provided a lot more insight than the people at Remserv that answered my questions originally.

    It felt a lot like they are trying to pull one over me when they said the $18K was interest. But I feel a lot more comfortable to talk to them again on Monday.

    Thanks

    • 

      madbear on 31/01/2022 - 12:48

      Heya i am in sort of the same situation as you, what ended up happening? they are calculating what i have to pay out now and options but from what i am reading seems like i really shot myself when i signed up for remserv novated lease

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  Magda8 on 07/02/2022 - 15:03

  Heya, I am in a similar situation. They seem to be going around in circles when I ask for a full breakdown of money owing and money paid on the vehicle.

  I am definitely never doing a novated lease again.

  Is there a trick to ensure that I am not paying too much?

  What ended up happening with tsururu?