How to Get Straight Info from My Novated Leasing Company?

LGitos on 26/05/2023 - 17:28

I'm in the late stages of arranging a novated lease for our incoming vehicle and have some concerns about our leasing provider (mandated single leasing provider by our employer).

For example, each time I try to refine our quote, I find details are consistently not entered correctly by the leasing consultant. Running costs keep changing, price details have been incorrect a number of times. As we have changed spec/inclusions a few times, so I've not been too bothered by it, but now we're sorted on spec and it's still happening.

Most concerning is the difficulty I'm having in getting the clarity on the interest rate. The quote is currently based on 10.x%, although the current rate applicable via their financier is 8.x% (as advised verbally). This is on a quote that he asked me to sign!

When I called this out, the consultant said that we'll be eligible for a lower interest rate in June (when the car is likely to become available), so he'll wait until then to input the correct interest rate. This just seems a bit shifty to me. Why not enter the best available rate now for the purposes of the calculations?

Does anyone have any advice/tips on how to lock down all the necessary details in full transparency with a novated leasing provider and avoid any nasty surprises? Or know of any tricks that they might try to watch out for? I feel like I need a broker!

Automotive Novated Lease

Comments

  • spackbace on 26/05/2023 - 17:31
    +2

    the consultant said that we'll be eligible for a lower interest rate in June

    Given rates change every month, if they go up next month (which seems likely), you're gonna be screwed…

    This is also why they won't quote you on next month's rate, since it's unobtainable now

  • Gnostikos on 26/05/2023 - 17:43
    +2

    I swear OzBargain needs to start offering car financing services for high yield investment vehicles, given how many posts we see on this forum about this topic.

    There's a few members on here who could probably do a better job than 90% of leasing consultants out there for those always sought-after status symbols that are the C63 AMGs and high-yield BMWs. Free humiliation and mockery upgrade as standard with the optional carbon ceramic trolling package and dignity delete.

    • spackbace on 26/05/2023 - 17:48
      +1

      And of course, it's a Tesla

      • Gnostikos on 26/05/2023 - 17:49

        May we also offer you an annual subscription package to unlock the hidden tier of spicier sh*tposting that comes disabled from the factory?

  • Drakesy on 26/05/2023 - 17:57
    +1

    As much as i like the idea of novated leasing the fact that they hide the actual rates and are pretty my leaching from the taxpayer in the name of tax avoidance

    • mskeggs on 26/05/2023 - 18:18
      +1

      I see you now understand how a bunch of people get rich in Australia.

  • freefall101 on 26/05/2023 - 18:06

    Nope, they're going to screw around until the very end. I got notification of my car being ready next week (good ol' BYD, hear nothing for 3 months suddenly the car can be picked up in a week), so they immediately redid the pricing and let me know that despite the loan already being approved they can't make payment that quickly.

    The thing is though, they're just a middleman taking a cut for being a middleman. They don't do the insurance, the loan, the pricing, any of that. They just get kickbacks so they never know themselves until it's finalised.

  • dasher86 on 26/05/2023 - 18:15

    I can guess which leasing provider..

    But apparently there is a backlog due to EV FBT Incentives.

  • Bid Sniper on 26/05/2023 - 18:53
    +1

    LOL@ full transparency with a novated leasing provider

    If there such a thing then there would be no novated leasing

  • seannami on 26/05/2023 - 19:26

    My company has been very open with rates, processes, fees etc. Sounds like they are the exception! I also has a choice of two so they probably had some motivation for better practice. The only thing that was uncertain was the .X on the interest rate since that isn't actually fixed until lease day (though it may have been fixed for me already, signed the near-final schedule when the car hit port, its apparently just gotten past quarantine and is waiting its turn on the truck).

    May seem like a dumb question but have you asked them to talk your through the quote bit by bit? Could the rate % be a fee in your quote they are lumping with the interest rate (account keeping or something) into that calculation? Maybe ask for full schedule documents to look over. Sorry you had a sucky experience.

    Final option might be to put in a complaint with your employer, especially if they are large scale- threat of losing a big client might have them pull their head in.

  • kawinuyo on 26/05/2023 - 22:28
    +1

    I don't understand why people get hung up on the interest rate percentage. As long as you know how much you are paying in total you can work out whether it is beneficial or not? E.g. For ours we did a one year loan. It's monthly cost (this they are upfront about based on the figures you give them on fuel and car cost etc) x 12 + residual payment - the tax return in my pocket from paying for things pre tax vs outright cost of car + fuel + ctp + comprehensive x2 (paying for next year prior to lease end) + service fees. From this I worked out we'd be 2.5k better off doing novated lease. Nothing to turn my nose up at. Also the interest saved with it sitting in offset for longer.

    • kawinuyo on 26/05/2023 - 22:47
      +1

      My tips though would be to source your own car separate to what the novated lease people can get to see if it's comparable. I ended up getting my own deal, paying a deposit on it and letting the novated lease people know. (when I was dealing with the dealerships I let them know I was going to go through novated lease as part of the negotiation). Although I don't know how helpful this is when you are in the late stages of this. Organise your own car insurance instead of use theirs and don't have any extra add ons.

    • seannami on 27/05/2023 - 07:45
      +1

      I roughed out my maths in this thread for mine (NVL vs financing, and a little bit of NVL vs outright) if that helps people

      https://www.ozbargain.com.au/node/760061

      (Replying here cause it's on topic for NVL maths rather than mugglesplaining)

    • DarkOz on 27/05/2023 - 08:36

      Knowing the interest rate makes things less complicated and more clear on your choices. You can actually request the interest rate to be lowered if it's too high.

      If you are paying extra 3%-5% in interest rates, you might as finance it through a secured car loan with much less paperwork.

      • kawinuyo on 27/05/2023 - 08:52

        Ah yes, this is true if you needed finance in the first place and wasn't doing it for the tax benefits. Good point because in my mind I had only considered cash as the other option. Okay, so the caveat for not needing to know the interest rates is if you are gonna to buy it in cash outright otherwise.

        • seannami on 27/05/2023 - 09:29

          This also assumes you are only accounting for paying the car purchase cost. Once you factor rego, insurance, fuel/power (if available), tyres, servicing, consumables being pre tax, the extra interest doesn't really factor. Mine was significantly cheaper than finance even with extra debt insurance

      • kawinuyo on 27/05/2023 - 09:01

        I just had a look at the lease documents we had to sign, it doesn't say interest on their either and that's from the financing place! It just mentions the repayment terms and the residual so you can calculate it yourself. Seems my rate is 10%.

        • DarkOz on 27/05/2023 - 09:22

          They are doing something dirty/dodgy by not disclosing the interest rate. Imagine if you get a mortgage from a bank that doesn't tell you the interest rate and only the repayment? 10% is the norm but another OzBargainer posted recently that her interest rate was 12%.

      • seannami on 27/05/2023 - 09:19

        I looked into that, with running costs and finance payments coming out pre-tax, the NVL was still saving a load over 5 years (NVL was $150 more than current car outgoings/ pay cycle loan on same car was $400 more)

        ETA: if you then add the $120/fortnight to save up for the residual over 5 years, it becomes $270 vs $400, but the residual savings are going into an offset account on the mortgage so the interest difference will sort of be a wash

        • DarkOz on 27/05/2023 - 09:33
          +1

          You will always come out on top. If not then why bother with it, right?

          The questions is how much on top? All the tax savings are fixed so they can't/won't hide it. Imagine if you can save 2% interest rate (8%) on top of your current 10% offer. That would save you a few thousand dollars more.

        • kawinuyo on 27/05/2023 - 10:10
          +2

          That's cool, I made a spreadsheet with all the possible years to keep and 1 year was the best for us, we don't use that much consumerables with our current car and so our savings went down over time. I even did a reducing table to check how much we'd save in the offset!

  • DarkOz on 27/05/2023 - 08:30

    They are actively hiding the interest rate on purpose. Right now, you should expect it to be around 10% - 12% compared to the secured car loans of 6% - 7%.

    Both our novated lease didn't have the interest rate on them until nearing contract time. The company ignored our request last month on the interest for renewal on the balloon payment and went on a hiding. The less time you have to finance/refinance the more pressure you will be in and it's most likely that you will opt for the high interest rate.

    • dp1 on 03/06/2023 - 16:32

      EV green loan rates are a bit lower, I recently applied for 4.89% 5yr fixed (4.93% comparison) via a credit union (although rejected, because 3 jobs via ABN plus one PAYG puts me in the too-hard basket).

  • dasher86 on 29/05/2023 - 18:07

    They will never give you a "comparative rate" either.
    Different establishment fees and weekly admin fees too, makes it harder to compare like for like…

Login or Join to leave a comment
Login Join