I'm considering a self-managed novated lease through Maxxia. Who should I contact to arrange financing for this? I'm told I can get a much better interest rate but not sure who offers financing for a self-managed novated lease.
Finance Provider for Self-Managed Novated Lease
gwong on 08/01/2023 - 14:32
Comments
Because I haven’t organised financing for one before? I’m not an idiot I just want recommendations for financing from the ozbargain community…?
Fair enough. Good luck with the process.
cba, nab, toyota, angle … any of those majors will do the deal at much better rates than the "management" company
Didn’t know you could do this
I am actually considering doing this myself with a EV car, although I have found a lot of the financing company's with low interest rates have high establishment fees ~$1000. Just a note to consider.
a EV car.
a ATM machine.
I agree with @Muzeeb. The whole point of a Novated lease is that they do it all for you and all the finance is done for you, along with payments.
I have one through work and got it early last year, it was pretty easy. They send the invoice to my employer each month who pays it and then I get my pay cheque each month less the car amount.
I pay for the insurance each month and they just reimburse me. I have a fuel card from the provider and that's it. It's easy and one of the best things I did. Save on tax, get a really nice car and pretty much get the same pay cheque each month (a nice little pay rise did help).
I am confused about why you need to arrange the financing…..????
If you are getting pretty much the same pay each month, doesn't that mean you are going to have a huge balloon payment at the end? If so what are the options when the lease comes to an end, i.e. can you extend the lease or are you required to sell and pay off the balloon?
Pretty much got the same pay after a pay rise. At first, it was about $400 less per month, then I got a pay rise, so that got much up to pretty much the same.
The balloon payment is about $20k at the end of the 5 years on a car worth $70k.
I can extend the lease, hand the car back or buy it from the Balloon payment. My plan is, to pay the Balloon and then privately sell the car. Should be able to make $10k to $20k from that. Then start a new year 5 year lease on a new car.
But overall, I am also saving around $10k in tax per year (based on my current salary) plus other car costs that would normally come out of the monthly pay check.
To clarify about "pretty much getting the same cheque each month", here is how it went:
- Before lease monthly pay - $5,800
- Started lease - $5,000
- Got a pay rise of - $5,000 p/a
- Pay is now - $5,400
The monthly payment before tax is $1700 then another $300 after tax for FBT.
It's a convenient option and saves me $8.5k in tax according to https://paycalculator.com.au/ when I add in the numbers.
Something also in those numbers that I probably should've mentioned is that I had a HEX at the start of the lease, and then I paid out the remaining at tax time (was only $2k). So that also helped that their wasn't $600 odd a month coming out.
I did the numbers if I was to do a lease or do a loan + costs and it saves me a bit per month, but it's also the tax plus budgeting. I don't have to worry about "oh, I need $300 for the car service" or "rego is coming up, I need to have $800". I just pay it and get reimbursed for things like rego and insurance. I have a fuel card so fuel is covered whenever I need it. I don't have to worry, "Oh, here goes $175 for a full tank of diesel".
your novated lease company would have a interest rate of 12-15% on the lease
private financing rates are closer to 7%fair amount of difference.. which leads to the savvy person enquiring about arranging the financing themselves
you probably wont be able to save much doing it yourself plus the hassle involve
probably not worth the time and effortyou probably wont be able to save much doing it yourself plus the hassle involve
I am still confused about how you can novated lease yourself. Unless the OP needs to arrange the finance themselves…. but I didn't have to in my case.
@gwong how did you end up getting on with this? I am starting to think of doing the same.
MG 4 isn’t out yet or BYD hatch so waiting for those first
So did you find any companies that offered more competitive finance?
Keenly watching this topic as well, interested to see if a better finance deal can be had by sourcing yourself rather than using the lease manager's lender.
@geekcohen - this may help:
https://www.maxxia.com.au/fully-maintained-vs-self-managed-l…In my (limited) understanding, the basic structure is the same as any other novated lease, you just don't get all the 'benefits' that a lease manager packages up for you. (eg. fuel card, paperwork, insurance)
For those following this I've since spoken with NAB business lending, whom just happened to be the ones that got back to me first. It seemed pretty straight forward to arrange the finance through them once you have an invoice/order for your vehicle.
I'm still waiting to hear back from Maxxia on the rest of their process. I did find this link from CBA to get a finance estimate which looked a lot more competitive than the "full service" offering.Thanks for sharing petem
No worries, I suggest if your employer is locked in to Maxxia for leasing and you want to organise a self managed lease, that you start trying to contact Maxxia about it now. So far I haven’t been able to speak to anyone about this as no one returns calls or emails.
The maxxia self-managed team is about 3-4 people. maxxia doesn't make any money off of those who choose self-managed lease option as they cannot pocket the tax savings you make via a higher interest rate (12-15%). they can't hang up on you quick enough if you start enquiring on the phone about self-managed.
I thought this was a great question….how did you go finding a better deal?
I'm also interested in this approach. How did you go? Would you recommend a self managed novated lease?
I ended up going with Novated Lease Australia to arrange my “self managed lease”. They act as a third party introducer and set the whole thing up. Went with Macquarie leasing for finance at about 8.5%. They then handover the lease to maxxia to arrange deductions from payroll. Still cheaper than direct with maxxia which was close to 13% but saved me the hassle of setting up finance and weekly budgeting schedules. I could recommend them as they did a great job without adding on sham insurances that maxxia do. I have a referral available where we both get $200 gift cards if anybody is interested
Dm sent
I just got a quote from Novated Lease Australia and it was more like 10%, for a EV
For those following I completed this process a few weeks back and here are a few notes that may be of interest.
None of this should be taken as advice, everyone has different personal circumstances, and you should be seeking your own financial advice from a licensed professional.
Worst part for me was the communication with Maxxia and confirming they could offer self-managed through the arrangement they had with my employer. My understanding is this varies from employer to employer. It took 5 weeks for me to get a response and email with instructions on how to proceed with self-managed leasing. This involved multiple follow-ups and eventually escalating through Maxxia's complaint process and my employer.
Once that was done the rest was relatively straight forward, noting communications with Maxxia at this stage still had a 1 week lag. Meaning it would take a week to receive a reply or for them to action something. This is good to know as one of the steps was to forward the Deed of Novation from the financier to Maxxia so they could then send it to my employer for signing.
Finance I arranged through CBA for 7.09% (as of 28th June 2023), it was originally 6.89%, but increased due to delays in the vehicle being ready. CBA's application process was simply, straight forward and turned around pretty quick, plus they were always quite responsive to calls or emails. NAB was the other contender for finance, they were 0.2% cheaper but their customer service was pretty ordinary, and the application requirements were excessive.
The bulk of the other work is to fill out the Maxxia application form and to collect and forward various documents to the right people. There is a Maxxia guide to completing the documentation for SAGov employees that can be found on the web, I used this to steer me in the right direction.
It's also worth mentioning that you should educate yourself on how Novated Lease payouts work and how this may affect your insurance requirements. As the lease is a commercial financial offering things can work differently. For example, it is good to understand your payout figure should you right the car off on day one is equal to about the total lease repayments due over the life of your lease, plus any balloon amount. Meaning it is much more than you paid for the car. Many commercial car insurance policies include finance gap cover, but personal policies not so much. I was able to obtain insurance through a QBE agent that includes finance gap cover, or it is possible to buy the "junk" insurance the likes of Maxxia sell from other brokers to give you gap cover.
I also found that both NAB and CBA would generally not entertain the idea of asset replacement. So new for old policies were of no use and agreed value was required.This was pretty much my experience. Maxxia couldn’t hang up fast enough when I asked about self managed lease as an sa gov employee. They falsely advertise that they are the only option available for sa gov employees. It’s true that they are the only option available for management of the lease, but there are third party companies available as third party introducers that assist you in setting up the lease schedule, arranging finance and lease documentation before handing over to maxxia to manage the lease payments. Thankfully for a self managed lease maxxia charge fairly reasonable fees to manage the payments
I'm glad you could use this option, I also tried going this route, but it was suggested that Maxxia's acceptance of this is dependent on employer, and I was not eligible. Certainly sounds like a much better middle ground!
@PeteM
it is good to understand your payout figure should you right the car off on day one is equal to about the total lease repayments due over the life of your lease, plus any balloon amount. Meaning it is much more than you paid for the car.
This is a good point, and I think would be relevant to all novated leases where you source your own insurance (not just self-managed leases).
And I'm assuming this payout would have to be paid by yourself, meaning post-tax out-of-pocket too. Unless I'm mistaken?
I would imagine so, although I am not well enough informed on the various laws or regs that would come into play given the various parties involved. I understood as you suggest as the payout would not be a running expense? I played it safe and made sure my insurance covers the full amount including GST.
But you are certainly right that this should be a consideration for anyone arranging insurance on a leased vehicle. I was concerned as I had the impression Tesla's were often being classed as write-offs as opposed to being repaired, I imagine due to challenges repairing the cast body or challenges in completing repairs when the structural batteries are involved.
I have also heard that some leasing providers have their own funding sources, meaning they are not using traditional lenders but rather their own pool of investment funds. Potentially in this case the leasing provider is more open to accepting an asset replacement or creating a replacement lease without the penalties associated with standard novated lease finance contract. In this case having new for old insurance may be suitable and again shows it is worth people looking into these things and asking the questions.Thanks very much for sharing your experience with us PeteM.
(And thank you also to @budgetgaming)
Thanks for the post PeteM, are you able to provide details of the insurance broker/agent you used?
I ended up with a QBE policy arranged through DSH, I understand only their home insurance offerings have restrictions on who can purchase, and car insurance is available to the general public.
I was able to calculate an agreed value that when combined with the 25% gap cover benefit in their policy covered me for the worst-case scenario of writing the car off day one.If you're looking for gap cover (or Asset Protection Insurance), like what some lease companies sell you for many thousands I found this available from a company called Coveru(*noting I didn't purchase this type of insurance.) Their quote was around $1,100 for $20,000 max benefit. Although they offered cover with a range of benefit levels.
I found paying a little extra for the first year of cover with DSH/QBE was better value.
DSH? assuming you're a vet or currently serving? so not applicable to everyone here?
You say you organised finance through CBA, is it just a normal car loan or some other type of finance? Do you have link?
A question: a lot of the lease repayments are for running costs, so the insurance wouldn’t need to cover that, right?
Short answer is that the sensible decision is to make sure insurance covers the worse case scenario. E.g. whatbdo you need to pay your financier if you write the car off day one.
Question: can you claim GST when self-managing?
Depends on lease management company and your employer. Some employers may retain the GST credits. In my case I receive GST rebates each month into my maxxia account, about 1or 2 months after the expense was incurred.
I believe in the backend Maxxia sends a GST statement of sorts to the employer every month and then employer claims that GST and either remits it back or keeps it.
If you are going to go to this effort of organising a novated lease, why don’t you consider investigating if an associate lease is suitable for your situation?
Anyone have any luck doing this with smart salary?
not sure if this is common knowledge or not but can someone explain:
when self-managing, we can find our own financing options.
Do I just look up any car loan provider and look at the rates and fees?
Or does each salary sacrifice company only work with certain lenders?
Or is it any lender, provided they have a novated lease option, but not every lender has this option?
If the latter, did everyone just go with a bunch and ask, or is this something i can readily find on their websites?Is it possible to find an individual accountant to do the documentation and find my own financer?
The fact that you are asking this question suggests to me that self managing a novated lease is not for you.