Novated Lease Calculation Help Please!

b-t on 23/11/2021 - 15:48
Last edited 26/11/2021 - 00:57

Hi all,

I know this has been discussed again and again (and again) on multiple threads, forums, and such. The consensus that I've seen so far is that novated leasing is good in certain scenarios but it seems to contradict what I've been calculating with my situation.

I just wanted to see if some (very nice) person could please check through my calculations to see if I've calculated correctly, or if there's anything I've missed.

So, I'm on the market to [most likely] get a Tesla Model 3, mostly because it's relatively affordable, nice to drive and fully electric which both me and my partner appreciate.

The RRP price for what we're looking for (as mentioned on the Tesla AU website) is $66,543 (in VIC) (which includes the paint job).

We're comparing Tesla's provided 2.99% APR financing option for 36 months (3 years) vs getting a novated lease through my partner's company (NLC).

NOTE: The comparison below uses 61,000 as RRP because NL says they didn't have the RRP on hand so they used a rough estimate of 61K

Financing:
[email protected] APR = $63852.66 over 3 years
+ 937 per year on tyres => $2811
+ 1000 per year cost of registration => $3000
+ 2000 per year on comprehensive insurance => $6000
total cost of ownership for 3 years => $75,663.66

Novated Lease:
pre-tax portion => $4897.44 per year
post-tax portion => $12200 per year

pre-tax delta loss on take-home pay => $2844.12 per year
+ post-tax portion => $12200 per year

multiply both by three + balloon of $28609.32 to get total cost of ownership over 3 years
= 28609.32 + (2844.12 * 3) + (12200 * 3) => $73,741.68

The budgets for running costs above may be a bit off but I was doing a like-for-like comparison as provided by NLC to better understand the difference, but at this rate, it does seem that NL is cheaper by $1,921.98, even though it's a 3-year lease? But most people are saying that anything after year 1 lease is not worth it?

It makes me really feel like I've calculated something wrong lol, any help would be appreciated!

EDIT:

For those that are wondering or end up coming to this post for information, I ended up getting the 2.99% APR finance option rather than a novated lease.

  • It's actually worthwhile doing an NL in certain circumstances. This mostly would be if you were comparing the difference between a finance (loan) option against an NL; the NL will be cheaper in certain periods of time (eg 3 year loan). However, paying outright will always be the cheapest (of course).
  • The reason I didn't go with an NL is because I didn't want my partner to have the pressure to not be able to change jobs or think about having to get the lease transferred, which I have heard from a couple people that this could be challenging. If we were unable to get the lease transferred when she takes on a new job, then we'd have to pay out the residual + a cancellation fee, making the whole NL completely pointless.
  • The 2.99% APR is crazy low in comparison to most finances. When you compare 2.99% APR and the NL, the difference between the two is low enough that I'd rather just take the easy way out and be free to do whatever I want.
  • Because I'm purchasing an electric vehicle, most of the costs that a traditional ICE car has is lost and hence cannot be claimed as part of the NL. Those would make up a big part of your pre-tax savings and hence again why it was not worth me taking up an NL.
Automotive

Comments

  • deme on 23/11/2021 - 15:52
    +3

    The consensus that I've seen so far is that novated leasing is good

    Have you not read anything on ozbargain, novated leasing make no sense these days.

    • b-t on 23/11/2021 - 15:53
      +1

      Thanks for the reply — but why?

      I just gave all the calculations above and I would save $1921.98 over a 3 year period in comparison to even a ridiculously low 2.99% APR car loan. Where have I calculated wrong? That's all I wanted to know.

      Of course, it's not the ridiculous BS number they gave me on the PDF (which says I'll save over $11K in 3 years) but even with these crude calculations, I am saving just under $2K?

      • deme on 23/11/2021 - 15:54
        +3
        • 937 per year on tyres

        What, is this really the yearly costs for tyres? That seems insane!

        • 2000 per year on comprehensive insurance => $6000

        Are you a teenager? That seems expensive.

        61,000

        Do you really need a loan for this? Seems like a waste of money.

        https://www.ozbargain.com.au/search/node/novated%20leasing%2… has some examples

        • b-t on 23/11/2021 - 15:57

          What, is this really the yearly costs for tyres? That seems insane!

          Tesla does say they recommend you change tyres every 20kKMs, and just looking around, the cost of a set of 4 tyres is around $2K because apparently they have to be "Tesla-certified" or some BS like that.

          But again, this is an NL, I can adjust the numbers as I want as long as I have something to work with, it's just a rough estimate.

          Are you a teenager? That seems expensive.

          Nah, I wish I was though :) I'm getting old :(

          But no again, this is estimated insurance. I did just the first AAMI quote check and it gave me $1234 (haha) per year comprehensive insurance. I can get NL to give me a new quote for insurance at $1234 per year.

          The only reason why I used these numbers is because I have to do a like-for-like comparison. It's not fair comparison if I don't.

          Do you really need a loan for this? Seems like a waste of money.

          I don't. I have the cash to afford it. But to be honest, at 2.99% APR, even if it's going to cost me 63K at the end, I can easily make more than that by investing it.

          https://www.ozbargain.com.au/search/node/novated%20leasing%2… has some examples

          I've read almost every single thread and they're all mixed. Even, I read all the Reddit threads and they're mixed. I feel like I'm missing something in my calculation…………….

          • deme on 23/11/2021 - 16:01
            +3

            @b-t: Wow Tesla use 255/40R20 tyres
            The Tesla 3 is 1.6-1.8 Tonnes

            Are you sure they didn't say 20,000 miles?

            changing every 20,000 k seems very wasteful for the environment.

            • b-t on 23/11/2021 - 16:04

              @deme:

              Are you sure they didn't say 20,000 miles?

              I'm just repeating what I was told. I'm not too familiar with cars :)

              I was told that electric cars have a different braking mechanism and therefore tyres wear out quicker than traditional ICE cars.

              Honestly — I have a VW Golf right now and I can't even remember the last time I changed the tyres…..

              Again, I'm just doing a like for like comparison. If I really wanted to, I can reduce the entire "tyre budget" to zero, but it's kind of pointless because one day I'm going to have to change them so it's good to budget at least something into that bucket. How much exactly, I'm not too sure.

            • Drakesy on 23/11/2021 - 17:26

              @deme: Totally agree
              My Audi Q7 has the equivalent but slightly wider tyre and it's 2.2 tonnes.

              We'd go through a set every 15-20,000 and replacement cost would be roughly $1000 max - just running generics $2000 seems outlandish

          • Mikeee on 23/11/2021 - 16:34

            @b-t: Tyre rotation is recommended at 10kkm, haven't seen Tesla recommending changing tyres at 20kkm. From what I've seen most last 40-60kkm.

            Tire Rotation, Balance and Wheel Alignment
            Tesla recommends rotating your tires every 10,000 km or if tread depth difference is 1.5mm or greater, whichever comes first. Aggressive driving can lead to premature tire wear and may require more frequent tire service. Unbalanced and misaligned wheels affect handling, tire life and steering components. Refer to tire manufacturer's owner manuals and warranty documentation for additional details.
            https://www.tesla.com/en_AU/support/car-maintenance

            • b-t on 23/11/2021 - 16:36

              @Mikeee: Yeah I saw that too, I'd definitely keep that in mind when I can work out which way I'm going to take.

              20kKM to me also is kind of crazy. I'd say I do around 15kKMs per year, so they're telling me I have to change tyres every 1.25 years, which … I'm pretty sure my VW Golf hasn't changed tyres since before COVID was even a thing…

              • Mikeee on 23/11/2021 - 17:19

                @b-t: The 40-60kkm is for the sticky 20" Michelin PS4s tyres, the standard tyres on the RWD Tesla 3 are 18" and should last longer and are cheaper. The T0 Tesla designated tyres have the foam inserts so may be quieter (YMMV) but any extra load tyre will do. I've heard some good things about the Pirelli PZ4 as an alternative.
                If you do end up going with the Tesla you'll probably be asking yourself why you didn't do it earlier ;)

  • May4th on 23/11/2021 - 16:25
    +2

    it's rarely worth the trouble. the little you save on the tax efficiency is usually taken by the NL provider in the form of above-market interest rate and admin fees you're rarely better off. even with the calculation where the cost of non-NL running cost is probably on the higher side, you're maybe 1k better off with the added restriction of KM limit per year + not being able to sell the car when you want to. i wouldn't bother unless the savings were more significant

    • b-t on 23/11/2021 - 16:39

      the little you save on the tax efficiency is usually taken by the NL provider in the form of above-market interest rate and admin fees you're rarely better off.

      Yeah so that seems to occur only if your lease period is too long. For example, I told them to do a 5 year lease period and like you said, the total cost is ridiculously high since you're paying the interest and admin fees over a 5 year period.

      However in my example above, I'm actually saving just less than 2K, so I don't see why it's not worth it? It's of course in comparison to getting a 2.99% APR loan, which to me, is already ridiculously low. In fact, my home loan was originally 2.99% until this year when ANZ decided to push me down to 2.69%…

      the added restriction of KM limit per year

      Actually, this is an interesting point. Does the "self-declared KM limit per year" actually come into play? What effect does it have, say, if I was to go over this limit? How do they even check?

      not being able to sell the car when you want to

      I'm not too worried about this. I don't usually sell my car until at least the 5 year mark.

  • weezlebub on 23/11/2021 - 16:43
    +3

    for a tesla, it's probably worthwhile …

    the main reason why the folks at OZB don't like novated leasing is that they're cheap … they'll opt for a 2nd hand / ex demo / wait for christmas / tax time to pressure the dealership to drop the price by 10% - throw a descent deposit in there so there's a cash sweetener to drop it even lower and bob's your uncle …

    tesla is a different beast, price fixing and different tyres and stuff, you're probably going to be better off going novated before they realise their mistake :)

    • b-t on 23/11/2021 - 16:47

      the main reason why the folks at OZB don't like novated leasing is that they're cheap

      Hey, I totally understand. I was like that too, hence I'm here :)

      As you said, Tesla is a completely different beast. I'm also early to the party since they pretty much have a monopoly on electric driving right now. But hey, I like what they do and I'm (becoming more) environmentally conscious, so I figured I might as well get a Tesla now.

      you're probably going to be better off going novated before they realise their mistake

      Do you have experience with NL? Could you please check if my calculations above are correct? In a way, given the mixed feelings on NL, I just feel like this is kind of those "too good to be true" scenarios lol

      Again, not expecting crazy $10/11K savings over 3 years, but what I'm seeing above is pretty good in comparison to Tesla Finance.

      • [Deactivated] on 25/11/2021 - 02:04

        Check what will happen if you dont use up consumables. Might have hidden cost or change the calculation altogether.

        I have tried doing the sum and difference is negligible on the highest income bracket. 1. I dont drive enough to make sense of it 2. Variable factors, eg fuel usage, service cost etc can make a difference.

        Logically speaking. As much as NL companies try to tell you that they are the good guys and do whatever to save you money - load of BS. Whatever cut they take is enough to fund the NL industry is already not adding up. In the case of NL, it appears everyone is a winner 1. Car dealer 2. NL company 3. Buyer 4. Tax man (FBT). The saving has to come from somewhere… so someone amongst the 4 will miss out. Wont be 1 as they have sold the car. Wont be 2 as they have made money. Wont be 4 as FBT recoups what is missed out on tax deduction… so that leaves 3.

        I also find the argument to borrow being better than cash, as cash can be used for investment - not a good argument. Why borrow at 3% when offset account is somewhere from 2-2.5%?

        NL is deliberately packaged in a way that it is not easy to understand. Almost as good as some shifty AA rated structured products…. Good on paper, less so when taking a closer look at the basket of assets bundled.

        Now… one of the biggest advantage is the residual payout figure. The number is often lower than market rate of the vehicle. Therefore buying out and reselling means net cash inflow.

        I find NL too much hassle, nor I drive enough to make sense of it.

        Edit: figured you are in the 37% bracket. Dont bother… i could barely make sense of the numbers on 45% some years back. :) wont judge you on footing out 65k on a car…

        • Coops1 on 25/11/2021 - 08:00

          Totally Agree they are not transparent. Also financing is more like 5% above a self attainable rate. Your also correct on residual, you will almost always make a few thousand dollars on disposal, but you would get that anyways NL or not.

  • DJR9000 on 23/11/2021 - 16:47

    so i had a novated lease a little while ago. I looked at it again recently and was better off financially with a cheap car loan. It was something like $200 a month in admin fees which pretty much eat up the tax savings plus not a great interest rate. Used queensland country bank who had the cheapest rate.

    when I used nlc they were being pretty cagey about telling me the exact interest rate and focused on the monthly total until pressed hard. I would have used someone else if they didn't already have the arrangement in place with the employer. To their credit most of the claims I put in for workshop work, maintenance, fuel not on fuel card etc was pretty easy and paid quickly though.

    Oh and then they forgot to explain the full pre tax and post tax amounts and follow up with my employer leading me to have to have a $2k payroll "adjustment" .. yeah thanks for that.

    also bloody hated the feeling of being loyal to an employer… i know you can just pay it out/refinance or re-novate to a new employer but given I wanted to walk multiple times I'm glad I finally saw the back of the lease

    • b-t on 23/11/2021 - 16:49

      Sounds crazy!

      something like $200 a month in admin fees

      Yeah see if they gave me a figure like that, I'd seriously be like no thanks. I can manage my own money for less than $200 a month LOL

      The key point here is my partner's company either has a ridiculously good deal with NLC or I've seriously screwed something up.

      Admin fees is $15 per month => $180
      Establishment fee is zero => $0

      • DJR9000 on 23/11/2021 - 16:52

        check the interest rate , balloon % and km's per year assumption they are making. Oh and set your maintenance budget a lot lower. You can always top it up over time if need be or just set it high to start with and lower it once you understand costs better - you can pay for things out of pocket yourself if need be and claim it back - as long as the maintenance budget doesn't go into debit. You don't really get the opportunity to get leftover budget at the end of the lease, but it might come off your balloon, not sure what the rules are now.

        i think the tyres thing might be if you play one of the games on the display while the car is stationary the tyres move - not sure if it still does that.

        • b-t on 23/11/2021 - 17:06

          Oh and set your maintenance budget a lot lower.

          Yep, that's essentially what I did. In fact, I am going through my own car insurance because their one is ridiculously expensive, which pretty much allows me to change budgets as I need.

          You don't really get the opportunity to get leftover budget at the end of the lease, but it might come off your balloon

          Yeah this is a really weird thing, I know for sure it can't go towards the balloon because that's what I asked them before, but the leftover budget apparently can get paid back to you after they add the income tax to it at the end of your lease.

      • DJR9000 on 23/11/2021 - 16:58

        did you add GST to the balloon?

        One reason an NL is cheaper is the car is GST removed as you are buying for a business - that's an instant 6.1K discount. But you have to pay the GST on the balloon when the lease is up… not sure if you can transfer to a new NL and still claim the ITC

        • b-t on 23/11/2021 - 17:08

          did you add GST to the balloon?

          They've added that for me when they calculated the balloon price.

          GST removed as you are buying for a business - that's an instant 6.1K discount

          Yeah that sounds amazing, except once you add everything back in, it's almost the same cost haha.

    • DJR9000 on 23/11/2021 - 16:54

      sorry I should add the $200 a month was for some NL mob I looked at recently, not when I was with NLC. That was a lot cheaper but i think the interest was about 8-9% which was hidden behind the monthly figure.

    • spackbace on 23/11/2021 - 18:21

      also bloody hated the feeling of being loyal to an employer… i know you can just pay it out/refinance or re-novate to a new employer but given I wanted to walk multiple times I'm glad I finally saw the back of the lease

      That is a key point that people don't think about

  • Muzeeb on 23/11/2021 - 17:27
    +1

    CBF reading another NL thread but did your NL finance calculations assume that you don't finance the GST component of the purchase but you have to add 10% GST to the payout figure?

    Also, when I used to NL many moons ago the biggest advantage was the savings in fuel and maintenance of which a Tesla has minimal amounts of.

    • b-t on 23/11/2021 - 18:08
      +2

      add 10% GST to the payout figure

      Yep, it already has been accounted for in the calculations.

  • Shadowsfury on 23/11/2021 - 17:47

    I had a NL through NLC a few years ago:
    1) Check the implied interest rate
    2) Remove all the optional insurances - redundancy, scratch and dent etc
    3) Check your work's regular car insurance requirements - due to company requirement I HAD to use NLC's insurer so I got absolutely reamed on the premium ($1800 vs $1000 at RACV) which got rid of a big chunk of the savings given I only bought a $45k car
    4) Note that running costs are all estimates - you can top up or get a refund at the end if needed

    • b-t on 23/11/2021 - 18:10

      Check the implied interest rate

      I'll have to ask this, not sure if they'll give it to me though.

      Remove all the optional insurances - redundancy, scratch and dent etc

      Yep already done, was funny — they wanted me to buy insurance for the novated lease itself… that was a killer

      Check your work's regular car insurance requirements

      Tesla Corporate Program, 3 years of servicing is already included so I told them to equate the maintenance/servicing to zero.

      Note that running costs are all estimates

      Yeah I know that, but of course, I want to reduce the potential out of pocket dollars as I won't see the refund until the end of the lease, which is 3 years in advance.

  • avoidfullprice on 23/11/2021 - 17:54

    It makes me really feel like I've calculated something wrong lol, any help would be appreciated!

    Do you have the breakdown of the quote NLC have you? If you can screenshot it that would help.

    pre-tax portion => $4897.44 per year
    Pre-tax delta loss on take-home pay => $2844.12 per year

    You're on a 42% tax bracket? Is your salary hovering the 180k mark?

    • b-t on 23/11/2021 - 18:14

      Do you have the breakdown of the quote NLC have you? If you can screenshot it that would help.

      Sure! Thanks for helping! https://imgur.com/n9AqJ1V

      Probably ignore the NLC comparison part on the right. Pretty sure that's just marketing fluff, since I never even gave them my salary so I have no idea how they even calculate this magic.

      You're on a 42% tax bracket? Is your salary hovering the 180k mark?

      No, I'm on the 37% tax bracket. I calculated the delta using the pre-tax component value multiplied by 12 months to get me a yearly value, then subtracted it from my salary, then threw it into the Pay Calculator. There's a few tax things I'm not sure of though, like, do I pay my usual mandatory superannuation on my original salary and then reduce the tax, or do I just assume that my total salary is reduced and then I have to pay the superannuation on the reduced amount, therefore this number may not be correct.

      • avoidfullprice on 23/11/2021 - 18:49

        Well I don't follow how you got $2844.12pa

        It would be $4897.44 X (100% - 37% - 2%) = $2987pa

        Having said that, it is just $430pa more than what you calculated, so you are still about 1.5k better off in 3 years time. ScoMo phase 3 income tax cut will come into effect second half of your 3rd year lease, which again amounts to another $200 less benefit. You are still ahead in your circumstances.

        As long as you don't change company/pay out your lease early you're sweet.

        • b-t on 23/11/2021 - 18:52

          It would be $4897.44 X (100% - 37% - 2%) = $2987pa

          Can I ask what the 2% is?

          ScoMo phase 3 income tax cut will come into effect second half of your 3rd year lease

          Ah yeah forgot about this, but it still won’t change the calculation much since I’d be affected either way.

          As long as you don't change company/pay out your lease early you're sweet.

          Oh yeah that’s a big one, or at least I will pray my new company can help me buy out the lease lol

          • avoidfullprice on 23/11/2021 - 19:41

            @b-t:

            Can I ask what the 2% is?

            Medicare levy (not the surcharge)

  • Bid Sniper on 23/11/2021 - 18:14
    +4

    "Tesla Model 3, mostly because it's relatively affordable "
    "total cost of ownership for 3 years => $75,663.66"

    /spits tea

    Here I am driving a $8K Kia and enjoying it

    • b-t on 23/11/2021 - 18:15
      +1

      Here I am driving a $8K Kia and enjoying it

      Hahaha, I know mate.

      I also saw petrol prices at $1.93/L a couple days ago around here :)

      • Bid Sniper on 23/11/2021 - 19:01
        +1

        Setup a spreadsheet of your actual running costs. I found my fuel costs were the least on the list even behind tolls on a car that did 9L/100km av. Tesla power cost is averages 1/5th of fuel km per km. So its not zero

        Insurance and deprecation scales with price and is basically cost of a cheap car alone. Google "Tesla repair costs" ie Panel repair, some quotes come in price of a cheap car.

        I tired the run numbers on my Sunday car with a lease, saving were not worth the time.

  • Eeples on 23/11/2021 - 18:17

    Force them to tell you the interest rate of the finance provider for the novated lease. There is a reason why that information is hard to find out. Can you bring your own finance provider?

    $27500 per year (plus carry over if your super is under $500k; check my.gov/ATO) contributed at concessional rate.
    $4900? per year pretax for the novated lease.

    Means…. you will pay tax on your income less $32400 (maybe more in the first year or two if you have carry over)

    So, I guess you want to get your taxable income closer to 120K. (Super looks the easier way to do it).

    EDIT: oh…. closer to 45K (super still looks easier); not as useful at getting closer to 120K (as 4.5c Vs 8c benefit)

    • b-t on 23/11/2021 - 18:28

      Thanks for the reply but I'm not understanding you at all.

      Where do these numbers come from and why is super coming into play?

      • Eeples on 23/11/2021 - 20:35

        Some ppl try to minimise their taxable income by paying for things in pre-tax dollars. A novated lease does that (a bit). So can Super.

  • Dumax on 23/11/2021 - 18:34
    -1

    Novated leasing companies are so opaque that it's not funny…so despite "saving" 10% GST on everything (except for the balloon payment) AND "saving" ~42% by using pre-tax portion…you only save $1,921.98 over 3 years?

    • b-t on 23/11/2021 - 18:36

      Yep, that is correct. Therefore don't believe the BS they tell you in the flyers, advertisements and even on their own quotes.

      If you look at the quote I posted, https://imgur.com/n9AqJ1V, it says I will save $9987.80 during the life of my lease, which is a load of crap. I believe this is calculated on the fact if you were to take some super expensive financing 6-7% APR loan, then yeah probably in comparison.

    • avoidfullprice on 23/11/2021 - 19:43
      +3

      There is also a cash flow benefit. You could invest that balloon payment. @rektrading can provide the necessary commentary…

      • May4th on 23/11/2021 - 20:00

        Same if you just buy on finance at 3% or less pa..

        • avoidfullprice on 23/11/2021 - 21:22

          Only if you opt for loan with balloon payment in the end.

      • b-t on 24/11/2021 - 10:38

        That's exactly what I'm thinking. Even if I take the easy way out and get 2.99% APR financing and forget all this NL fluff, as long as I can find a product that's offering above 2.99% then I'm in the positive.

        Heck, even Finder's new Earn program at 4.01% APR would put me in positive in comparison.

  • suchcha on 23/11/2021 - 18:45

    It's not impossible for a three year Novated lease to have a net benefit. One thing to watch out for is, if the balloon payment include the gst portion of it. If not you'll have to add that to your calculations.

    • b-t on 23/11/2021 - 18:48
      +1

      Yeah I’ve included that figure with GST. Thanks for the reply!

  • Peanut money on 23/11/2021 - 20:19
    +1

    Have you considered getting a 1 yr lease? Found that to be the best bang for your buck vs paying for it outright

    Also it makes it worthwhile since running expenses are pretax. For an ICE car it’s even more tax beneficial coz of fuel costs

    • Eeples on 23/11/2021 - 20:41

      Indeed. Thats why some ppl take on a novated lease if they need to travel lots of km they can claim back heaps on petrol.

      I guess OP can claim on electricity expenses.

      • b-t on 24/11/2021 - 10:36

        Yeah, so apparently that's a hit and miss with some NL providers because electricity is hard to gauge. Therefore, they didn't include electricity costs in my package, unfortunately.

    • b-t on 24/11/2021 - 12:27

      Yep, I did that calculation too. If I did a 1-year lease, I would be net positive by approximately $4000 (don't have the exact number).

      The problem with a 1-year lease is that I would lose the opportunity cost of investing that amount, and I'm quite confident that I can invest the money in a better way over 3 years.

  • Eeples on 23/11/2021 - 20:39

    Can Tesla's financing include a balloon payment? (That would make repayments less).

    (I guess with the novated lease you are paying interest on the balloon as well? Or, do I have no idea?)

    • b-t on 24/11/2021 - 10:25

      Yeah it can, but personally, I prefer to have a steady cash flow rather than a lump sum payment at the end and actually it works out better too because the interest is on the remaining amount calculated daily (?) so paying down more will result in less interest.

  • singingwolf on 24/11/2021 - 07:37

    Did you add 10% GST to the balloon?

    • b-t on 24/11/2021 - 10:25

      Yep, I did.

  • Coops1 on 24/11/2021 - 08:36

    Its the financing (interest rate they charge) that kills NL. Its more like a personal loan rate!

    If you have cash or a low interest loan, better to buy yourself. If you have to finance at a high rate, the NL is the way to go. Being well into the top tax bracket helps a bit.

    Oh, by the way, better to not spend that much full stop :)

  • ColtNoir on 24/11/2021 - 08:56

    I’ve found my novated lease worth it, as I wasn’t able to get a loan lower than 8% 2.5 years ago. I’m with ORIX and including their fees, it works out to be 3.4%.

    Where are you getting $900/year in tyres? Are Tesla tyres worn out super quick? I’ve still go my original ones with Barry any wear after 20k km. I’ll likely only change them at year 4 or 5.

    The biggest thing for me besides the interest rate has been the ease of budgeting, it’s all done for you. The biggest issue has been moving companies and trying to change novated lease company, they say it’s easy, but it’s a punish.

    • [Deactivated] on 24/11/2021 - 09:21
      +1

      I wasn’t able to get a loan lower than 8% 2.5 years ago

      This is the only use case it benefits = doesn't work when you have access to cash or cheap loan like redraw

    • b-t on 24/11/2021 - 10:27

      Where are you getting $900/year in tyres? Are Tesla tyres worn out super quick?

      Do you have a Model 3 too? It's probably better to ask you then :)

      The $900/year tyres were averaged by 20kKMs distance. Because I told them that I travel 15kKMs, they told me that they'll budget to get the tyres changed every 1.5 years.

      They also told me that Tesla tyres wear out faster due to it being an electric car and the way that the brakes work, it will wear out double as fast as an ICE car. Not sure if legit but let's just go with that for now. I can always take it out of the budget later.

  • SlickMick on 24/11/2021 - 09:22

    Your figures indicate it's worthwhile - IF you want a lease. If you don't, then the savings mightnot be worth it.
    I've found that the costs of a lease eat up most of the tax advantages - similar to your figures.

    Since you're looking at borrowing anyway, I'd definitely do it through the lease. (But I would NEVER borrow money except that you have to for the lease.)
    However, I find the lease convenient. If you see it as an inconvenience like many of the commenters, then don't do it.

    • b-t on 24/11/2021 - 10:34

      IF you want a lease

      Yes, that is correct. That's why I'm posting here. It's less about the advantages of NL but it's more about whether my calculation is correct because it's somewhat "too good to be true".

      But I would NEVER borrow money except that you have to for the lease

      The thing is, I have more than enough in the bank right now to buy the car outright. But if I do that, using the same calculation (due to like-for-like comparison), then the cost will be 61000 + 11811 => $72811 over 3 years

      The difference between that and NL (73741.68) is literally only $930.68, and that's a 3-year contract. At a per year cost, that's only $310.23.

      • SlickMick on 24/11/2021 - 12:16

        Yeah that's the thing: the tax advantages get reduced by the interest.
        I'd have thought the advantages vs a car loan would be more substantial - your figures might have been a bit conservative. The NL calcs usually are - you don't spend as much as thier budget on anything, so end up with quite an excess by end of lease.

        Being cheap, I actually make more work for myself to save more. E.g. instead of using thier fuel cards (which disallow other fuel discounts, and sometimes even charge 50c per transaction), I pay for fuel (accumulating creditcard reward points), then lodge reimbursement.

  • boscom on 24/11/2021 - 09:32

    Get the exact contract as NLC added some more charges to the package, Carbon Reverse, Roadside Assistance, Administration Fee, Extended Warranty Insurance, Scratch and Dent Insurance, Tyre and RIM Insurance. They insist on some of this to protect themselves if the car is returned after the lease.

    • b-t on 24/11/2021 - 10:35

      Yep got them to remove all that BS. It's funny they want me to buy insurance on their NL…

    • Coops1 on 24/11/2021 - 20:40

      They only “insist” on these to make more money. It’s like HN’s extended warranty insurance, eg cream on the top.

      The condition of the car makes no difference if it’s returned to the leasing company (eg you don’t want to pay the residual and/or sell it yourself) as they don’t have a guaranteed $X price on the return.

      The contract is only finalised after the car is sold by the leasing company, either for less than the residual, which means you need to cough up more $ to finalise the lease, or more than the residual, which means you get money back above the residual.

  • Series4Episode10 on 24/11/2021 - 09:59

    $6,543 More than I paid for the 2 acres I bought in 2019 and now live on.

  • NeoX on 24/11/2021 - 11:44

    I"m currently going through the dilema. From my calculations, the savings on the novated lease is through the running cost (fuel, servicing etc) With a tesla there's none of that so NL doesn't look too good anymore other than the GST savings. Also NL can't get fleet pricing for tesla so it sucks on that too.

    For good NL get an ICE vehicle with running cost as you save on GST and tax savings there.

    Just my 2c.

    • [Deactivated] on 25/11/2021 - 02:12
      -1

      Fleet pricing is almost non existence on ICE cars with current shortage anyway.

  • OzHunterNSW on 24/11/2021 - 11:54

    Tyres last longer than that… and would certainly not cost any where near that

    • b-t on 24/11/2021 - 12:28

      Yeah, I'm expecting the same. I haven't changed my VW Golf tyres since forever…

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