Novated lease a used, private sale car

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  sumyungguy on 22/08/2023 - 09:20

  +1

  I know a super-nerd accountant who ran the numbers on novated leasing for a Mitsubishi Triton and concluded the benefit is (worthy) GST savings.

  • 

    wannagrababargain on 22/08/2023 - 17:44

    GST saving won't apply for OP who wants to buy car privately therefore no GST component

    • 

      sumyungguy on 22/08/2023 - 18:31

      That's what I was pointing out… If the only thing you're saving is GST then there's little point leasing a used car. And if you're taking out a novated lease without an FBT exemption you're not really winning. But I have met people who exclusively lease so they get to drive low km cars all the time.

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  GeorgiaTheCat on 22/08/2023 - 09:25

  +1

  It really just comes down to the maths. We just bough a new SUV and setup a novated lease for one year. Payments are therefore much bigger. As we are paying off significantly more of the car pa than on a longer term. Our net position at the end of the year is better than if we bought outright (our initial plan). Taking into account all running costs, interest on funds retained and taxes on those etc etc. Run the numbers on all options and pick the best.

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  Brian McGee on 22/08/2023 - 09:29

  Considering there are no EV utes available what is the actual use case for your circumstances? Do you just wannt to be another Ranger Danger on the road (although with different cosmetics) or are you just wanting an inner city runabout?

  • 

    dogboy on 22/08/2023 - 11:17

    What the hell is a Ranger Danger?

    • 

      Nugs on 22/08/2023 - 11:38

      Ranger drivers are the Danger
      .

    • 

      Brian McGee on 22/08/2023 - 12:59

      Its the Danger From the Ranger Ragers.
      They all seem to think they own the road and everyone else is just in the way.
      And more
      and another
      and another one just for fun

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  geekcohen on 22/08/2023 - 10:08

  Bad idea to lease a used car?

  No, it was an option when I spoke to my leasing company who managed mine.

  Lease a 50k AUD car, a Mazda diesel ute, 30.000 kms, 2022. Buying from my parents.

  Still a relatively new ish car and being Diesel, it will go for a fair while if regularly serviced.

  Looking to novated lease this for 2 yrs, 20.000kms per year. Salary is 200k+

  Why not do it on a longer lease? Heaps of tax benefits……

  Was looking at a new EV novated lease, but I have a nice offer to take over a car within the family for a good price. Considering I was looking at either a EV or a diesel ute, to replace one of our 2 cars, I am looking to compare the cost.

  Where do you live? Do you need a ute? Are you in the city? A BT-50 is a big car for the city, I have a Ford Ranger 2021 and it is big around town. I am in a regional area so it isn't a problem and lots of freeway driving so it is a nice car for that plus towing. But as a runabout, it drives me nuts. I take my Wife's Hyundai Tucson into town if I have to do anything, easier to park and drive around in.

  EV in the city would be good providing you have the options for charging at home.

  • 

    toomuchdogfur on 22/08/2023 - 10:32

    Why not do it on a longer lease? Heaps of tax benefits……

    Not always - you have to contribute 20% of the car's value each year with after-tax dollars to your novated leasing fund in order to avoid FBT liability. If your car expenses (fuel, insurance, maintenance, etc) aren't that high relative to the car's value, you might end up paying more than without the lease (taking into account the management fees and generally higher finance rates in a novated lease).

    Having said that, I found the 2 to 3 year mark to be a good balance of savings vs not having absurdly high monthly repayments. But there are so many different variables that it's hard to say… from what you've described OP, your situation seems ideal for leasing vs cash/finance:

    • Higher tax brackets see bigger savings than lower tax brackets (due to bigger difference between marginal tax rate and FBT 20% rate)
    • Lower vehicle prices see bigger savings than higher vehicle prices (due to lower post-tax contribution per year)
    • Higher vehicle running expenses see bigger savings than lower vehicle running expenses (as all expenses will be considered pre-tax expenses)
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  freefall101 on 22/08/2023 - 10:15

  How much of it will be personal use? EV has no fringe benefits tax payable, a ute will if any of it is personal use.

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  donbot on 22/08/2023 - 10:28

  EVs have no FBT provided they dont incur Luxury Car tax - so correct me if I'm wrong, but that caps out a lot of higher end EVs?

  I ask not knowing the answer but rather my (maybe incorrect) understanding.

  I'm in a Ranger and its great for highway & freeway, but like others have said - its a PITA around town. I run the premise if you cant park it, dont drive it - and so I like to think of myself as a reasonably decent driver, but parking it can sometimes do me in as they are HUGE.

  I'd happily convert to a large SUV EV given the opportunity, but the FBT benefit is too great on the ute.

  • 

    freefall101 on 22/08/2023 - 10:38

    If the Ranger is annoying around town why would you want to move to a large SUV? EVs are also really nice on the highway anyway thanks to low centre of gravity and lower noise, they're pretty pleasant to drive. EVs don't do well with air resistance too, so if you do a fair bit of highway driving I imagine a big bulky SUV would kill the range on the highway whereas smaller ones tend to be more aerodynamic.

    Luxury car tax is higher for EVs, it's $89,332, but yup that caps out most large EVs. Still makes things like the Merc EQA, Model Y, iX1, Lexus 300e and XC40 available.

    • 

      donbot on 22/08/2023 - 14:39

      The ranger is long - even a large SUV arent as long as this thing. That said, I'm in it because 1. It was a good deal to buy at the time, and 2. Having the space in the back is very, very handy, particularly with a canopy to make it more secure.

      We have a small-ish SUV for wifes runabout, and its great - but headed to the beach/away for the weekend with 2 kids is a pain with loading stuff into it - it just doesnt have the space needed.

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  cheapanddirty on 22/08/2023 - 11:44

  The use case in the long term is to replace both our cars for 1 diesel 4wd ute for long and rough trips, and 1 EV for the city trips. The original idea was to get the EV first, brand new, due to FBT benefits. My parents 4wd is available now though and it would help them out to get it off them. This changes my novated lease plans. Just looking to see if it is wise to lease a 1 year old ute. Of course, compared to the EV it would make less sense, but is it still worth it?

  • 

    freefall101 on 22/08/2023 - 15:06

    Nope. All you save on a novated lease that's 100% personal is the GST, which there would be none on the vehicle.

    You pay for everything out of pre-tax funds, but then your employer has to pay fringe benefits tax (and will likely pass it on to you). It's 47% of the benefit you receive, usually sending you backwards on the vehicle itself. Plus you're now paying for novated lease fees and the lease interest itself.

    Just buy the ute outright, it'll be way easier and likely cheaper.