Is it worth buying MG4 in current climate as the depreciation is so much that savings are negated.
I got quote for MG4 lease where after two years residual or balloon payment is 18k with drive away of 32k
Fuel savings and tax savings are good for MG4 as one is able to lease it pre tax 100%
But end of lease balloon or residual payment is much higher than antcipated market value of the car.
Thoughts please?
Who worries about buying a car unless it's second hand ? Depreciation is a fact with most items in life , so get over it .
Yes, it makes sense if you can find a good novated lease provider and you are using the car for private use. Otherwise, you'll never recoup the cost savings if you are paying 14% interest on it vs a petrol/hybrid equivalent.
I just NL'd and MG4
30k price. 3 years. With balloon of about 14k
I'll save lots of tax over that time and heaps of fuel costs. I reckon the balloon won't be far off the value
YMMV
I'll save lots of tax over that time and heaps of fuel costs
What about the fees etc, or is that 30k factoring that in?
The 30k was the cost of the car on the road. My fees will be different to yours cos I took out most things, inc insurance, all the stupid packages etc….
That’s a great price - was this in WA?!
@Newozbargainuser: VIC. Car in stock in silver. Jan 24 build date. So it turns 1 in 5 weeks and I've only had it 5 weeks !
@oscargamer: That’s awesome!! The silver is nice. If it’s any consolation lots of the stock people are waiting on to arrive is January built anyway!
This comes up every month or so to the point where admins should just link to the spreadsheet that guy made and close this thread.
I shall do it 😂
https://www.reddit.com/r/AusFinance/s/VHJ25VpNKu
At 30k, even IF the car depreciates to near-zero, you should still see a relatively good deal. And the car can’t depreciate to zero or negative.
And the car can’t depreciate to zero
Hold my beer.
Drinking while driving will do it :D
As for the generic question of “Is novated lease a good idea for me” here is my copy pasta.
Outside working out the figures for the savings, I would encourage people to hold a more holistic view about whether they are an appropriate candidate. EV novated lease is a great deal and gives you great discount even over paying cash (I was 46,000 dollars better than cash!), and are more favourable the more criteria you meet below:
• high tax bracket (the higher you are, the more saving you get)
• stable job (moving job or losing job are at best troublesome, at worst huge financial loss)
• have a home loan offset account (the idea is that avoiding paying cash from day 0 saves you plenty of home loan interest with the current interest rate)
• not needing to borrow money (for own house, investment property etc) during the lease term (having NL greatly decreases your borrowing capacity - I once heard that getting a 70k car on NL would reduce your borrowing capacity by 200k or more)
• considered the impact on government subsidies (many people would receive less childcare subsidy etc due to the way reportable fringe benefit is used to assess your eligibility and amount receivable)
• considered the potential impact of super guarantee (a small percentage of payroll very naughtily use the post-NL salary to calculate your super contribution - if they do, then you may lose some 1000+ per year in loss in super contribution by your employer)
• considered your exit strategy at the end of the lease i.e. are you prepared and have the money to pay out the residual. If you don't, you might be stuck with perpetually leasing a car - which may no longer be such a good deal if the government removes the FBT exemption. If you pay out the car then you will own the car and continue to enjoy the low running cost of EV (assuming that it doesn't otherwise give you too much costly trouble - and it looks like most EV will do okay)
My free spreadsheet on novated lease has been well received and does a comprehensive simulation of all the financial impacts - I am quite confident that it considers more aspects than an average accountant's back-of-envelope calculations. I still recommend speaking to an experienced accountant / financial advisor, however, do try out my calculator and perhaps even bring it to them as a starting point.
You’re the man - I still gotta buy you a coffee. I got a great deal
Edit: coffee money heading your way ;)
Also, your best tip IMO was to compare the base lease rate, not all the fluff (like car washes or tires or maintenance) etc, and interest rate which is part of that anyway.
I used your spreadsheet the other day and didn't even realise you were an Ozbargainer. What an absolute CHAD. Thank you for your service 🙌
EDIT: I sure hope $7 covers a coffee in Perth.
Will the depreciation be so bad? While depreciation on EVs has been pretty bad, i suspect that now they are becoming more common the depreciation wont be as much - plus the purchase price has come down a lot.
The old furphy of "yOuLl HaVe tO ThrOW iT aWAy aT 10 yEaRs cOz BaTTerY dEaD" is proving to be a media beat up. There will be a strong market for used EVs as people realise that a 5yo EV still has good life and you dont have to buy petrol or get oil changes. A commuter car doesnt need massive range so even a degraded battery wil get you to work and back if you charge nightly. Degradation is proving to be minimal, an EV should last 15y and still have 'city' range.
Extremes of temperature aren't great for the batteries, so experiences can vary depending on where you keep your car at home and at work. Parking an EV where it doesn't spend the day in blazing sun is going to help its battery last.
A lot of English language EV journalism is from the US and Europe, so the media beat up might in part just be folks talking about their own situation; most Oz winters will be pretty kind compared to parts of the US and Europe where the cold winters are another challenge for the batteries, both when driving and charging.
so the media beat up might in part just be folks talking about their own situation
While this is probably true, the media seems to jump on single instances of EV failures, 'anecdotes', and runs a click bait headline for the ad revenue. They dont typically represent the majority of EV owner experiences.
According independent research by the petroleum industry- 117% of EVs have exploded within 2 weeks of being purchased.
Only those whose batteries have not degraded totally within those two weeks, needing a $120,000 battery replacement.
an EV should last 15y and still have 'city' range.
i'll love to see these MG4's in 15 years.
You probably won't
Looks like at worse, 20% degradation at 10 years for Tesla's of that vintage.
https://www.reddit.com/r/electricvehicles/comments/16f31gy/o…
I think it's ideal to go for the longer range models for EVs.
I dont think there is any point in going for longer range if you arent going to use it. You're just carting around extra weight you wont use, kinda like leaving roof racka on but using them once a year.
Although you might find it easier to sell a long range model if youre selling at end of lease.
I dont think there is any point in going for longer range if you arent going to use it. You're just carting around extra weight you wont use, kinda like leaving roof racka on but using them once a year.
Doesn't seem to stop people buying "SUVs" and large US trucks when they drive solo most of the time though.
@smartazz104: That's different, the extra space is utilised and enjoyed with every ride. A long range battery is only used/enjoyed if you ever need to travel that distance or refuse to charge your car during a rainy week and let it run down to like 25% battery.
@Euphemistic: "kinda like leaving roof racka on but using them once a year."
You mean like 25% of the population does? :)
Depreciation has been bad historically for all cars. Like losing 20% when driving out of the dealership.
This is true. I think OP is hinting that depreciation will be worse for EVs. IMO itll be no worse than a comparable brand/model, amd may actually turn out to be less than a petrol variant if they being reliable at 5-10yo.
Theoretically 20%. Where can I buy day old cars for 20% off? I would happily do that.
The problem you get is that EV's are still evolving incredibly quickly, especially in the battery space. This absolutely has a huge effect on the used price as a 5 year+ old EV will be considerably out of date in most aspects to the point it actually devalues the car. We should also still expect prices to come down further in the EV market which has a devastating impact on resale value.
Im gonna disagree with new technology making a big impact on pricing. We dont see massive drop in value for 'old tech' in other used cars. Lots of people just want a way to get from a to b and dont care what the tech is. As long as it will have enough range for the task, people will buy.
True that dropping prices in the EV market might affect resale, but the MG4 is at the same price as equivalent ICE cars. I dont think itll go much lower than the equivalent ICE. After all aside from the drivetrain the rest of the car will still cost the same to make.
Apparently the chinese market is pretty much at parity now.
At parity means EV's have room to drop, they are mechanically much simpler vehicles consisting of significantly less parts. EV's should get to a level where they are a good deal cheaper than an equivalent ICE.
@gromit: They might be mechanically simpler, but theyve still got a whopping great big battery. That battery is made up of hundreds (thousands?) of little batteries that need lots and lots of connections. Its going to be hard to make that a lot cheaper.
@gromit: Its true battery tech is still evolving, but you arent going to get away from a whole lot of cells that need to be individually wired up and linked together. Then they need management systems and heating and cooling. I dont believe that quantity of work will be done for much less than the cost of making a petrol motor.
With the current range arms race, they are not going to make tiny battery packs to save costs. Maybe in 20 years theyll start making short range vehicles, but for now apparently everyone 'has to have 400km range' which requires big battery packs.
@Euphemistic: automation which is already heavily present in battery manufacturing already heavily counters their complexity and that is also evolving. There is still significant opportunity to improve that is not present for a petrol motor.
@gromit: Time will tell i guess. I cant see EVs getting much cheaper than existing ICE equivalent.
Yes, you'll be able to make a really cheap EV, but not with the level of comfort, safety and handling that we want.
It isn't just the step change, but it is also the amount of EVs being produced. Every year there are more and more EVs in the pool of cars, just by this alone you'll get more depreciation this is until the buyer side catches up. Once everyone is buying EVs and production stabilizes, depn won't be so bad
Out of date? Will the car stop working after 5 years?
Plenty of cars out there that don’t have Apple car play, emergency brake assist or even stability control.
Is the Car is out of date? yes, I think so but still works getting from A to B.
Is it worth buying MG4 in current climate
Depends if the car suits your needs - in current climate.
It’s got good air conditioning. That helps in QLD’s climate
Answer: it depends. Don't know all your circumstances.
If balloon is greater than market price you just hand it back and buy it at market price?
That's not how it works. At end of lease you have 3 choices
. Pay balloon and keep car
. Start new lease on car
. Sell car and make up or pocket the difference between balloon payment and sale price
There is no 'walk away' or 'hand it back' option
Netjock watching too much American content.
No. I just didn't realise it is such a bad deal.
Luckily never had use for NL. I've always used Super and prior year carry forwards to balance my taxable income.
If you're novating for that short a time, you are eating depreciation with both hands. Quote for 3-4 years and see the difference.
A lot of the depreciation will be because the cars have come in at a high price and have moved to where more people are willing to pay. They seem to have levelled out, but it's also likely there will be a bunch more competition in the next 6-12 months. The dude who bought a new MG4 for 40k 12 months ago is going to have a different depreciation experience in selling his car than a dude who bought one for 30k yesterday.
I just requested the quote . Residual went down from 18k to 15k. I would be paying 3k more in interest I.e 10.3 percent.
That's good then.
The interest is pre-tax, the residual is post-tax, also GST is added on the residual too.
That interest rate is too high, should be high 6 or mid 7
No choice to change NL provider
InB4 jv rants on some bullshit tangent about "fires" with absolutely no proof these vehicle catch on fire and the only link they have is to a Tesla that was wrapped around a concrete pylon at high speed…
And I would almost wait. SAIC/MG have just announced some new EV cars coming soon to MG, so you are either going to get a much better deal if they still have any old stock remaining, or you are going to get a much better vehicle with a larger battery and more range.
As for the lease and balloon… what are you planning on doing when the lease ends? Selling it? Giving it back and getting another lease? Or buying them out and keeping the car for a while? 18k after 2 years doesn't sound to far out of the ball park. Now if it was $18k after 4 years… meh, that would suck.
In 2 years from now, an $18k EV sounds like a pretty good deal. Still under warranty, service history, wouldn't have 200,000km on it (unless your lease is for Uber driving??) I would be happy to find a 2022 MG4 right now for $18k.
Thanks . Good points. I don't see any 2 year old MG for 18k
Because it wont be, people make up figures.
Is It worth Buying MG4 ?
There was an article kicking around say MG4 was the most sold used EV last month, read into that what you like.
So maybe grab a 2nd hand one that is only a few months old and save some money?
https://www.carexpert.com.au/car-news/australias-best-sellin…
If you don’t feel embarrassed driving around in an MG badged car then go ahead
Haha yeah thought about it as well … then got over it .. i just dont want to spend more …
"i just dont want to spend more"
Buy an old car?
.
Do people really care what others think of their car?
Yes, until they're 60.
Not really, you just assume they're poor or stupid.
I've passed on hiring trades that roll up in a GW a few times now. Wouldn't hire anyone that goes cheapest and 'that'll do'
What happens if they roll up in a Ford Ranger, a car they might not be able to afford but just got because everyone else has one?
If they turn up in a Ram or Silverado you know they are charging too much.
No, on the contrary, I think people become wise not to give damn about what others think of them. Or they realise that people indeed don't care about what others drive.
That's silly. My gwm ute was mechanically bulletproof. Used to tow the 3t car trailer without issue. It's still going as a friend's farm ute. Which isn't surprising considering it was 15yo engine tech when new.
Although it was pretty uncomfortable and the interior fell apart very quickly.
Depreciation is what inexperienced people talk about.
Here's a protip. Can you even sell it? Having an illiquid asset isn't talked about much.
I reckon in the next few years there will be so many of these and so few buyers due to preference of buying new on affordable , better, cheaper merits.
You will struggle to sell it privately at what you thought it was worth versus selling it at new unforseen lows at a dealership/lowballer.
*I speak from experience
People won't believe this and just end up rushing into these NL deals then what happens is they get lumped with it.
Not selling a car for what you think it is worth does not make it an illiquid asset.
RAC says Model Y is 28,000 pw total cost, love it when it isn't sense checked.
Just pay monthly instead, big savings.
Higher insurance costs than I thought on the electrics - $100 more a month within the same class for some of them? That's not across the board for all insurers, is it?
You can only run the figures for yourself and your circumstances. I run my figures for a MG4 on NL and it doesn't work for me.
Did any of the BEVs work for you?
I am not sure how the ATO & Treasury with so many brains could give you a benefit when all they know is how to increase taxes.
No, I simply don't do enough KM to make it worthwhile and the high interest rates charged by the financing company eats up a lot of the other savings. I own my current car outright which makes it quite cheap to run vs the NL costs
As someone who has done 3-4 ICE NL in the past and currently has a Tesla NL, the best criteria for any NL is basically:
- Higher your tax bracket the better, obviously
- Cheaper the capital cost of the leased car the better
- More expensive the running cost of the leased car the better (comparing car loan to NL)
- Lower the depreciation the better
- More expensive the running cost of your existing car the better (to compare against a cheaper NL vehicle)
- Higher the value of your existing car the better (to trade in and use in home loan offset)
I will say that NL doesnt work for everyone, but the FBT-free component of EV NL suits quite a lot of people. Back when I was doing ICE NL, the saying used to be to "lease the cheapest car your ego lets you afford". People tend to overstrech when they realise they can get a 3-series BMW for not too much more than getting a much cheaper car. Or everyone was buying a Prado as the idea was that after a 3 year lease then you could sell it for much more than the balloon payment to "make money" but in reality it was not lose as much money.
I have previously bought a second-hand cheap Mitsubishi Lancer and had it on a NL, and even with fuel and servicing it was still half the cost to lease compared to my Tesla. That said I am not sure how or why the MG4 doesnt stack up for you, but it doesnt work for everyone.
Also dont underestimate the actual running costs of a vehicle, I think even my cheap Mitsubishi Lancer was running at around $3000-4000 per year (varying depending on distance travelled).
My interest rate is <8% and it will be pre tax so take off about 1/3 of that.
I find EVs a lot more enjoyable to drive than standard autos and hybrids. Having that instant and constant power is fun.
Nothing beats a smooth ride
I delibrately left out manuals but commuting in stop start hilly traffic isn't that fun either. I'll take a comfy ride for my commute.
I prefer driving a manual and still own one. I think id prefer an EV over a standard automatic though. If im not going to get to choose the gears, why have any at all.
@Euphemistic: Same, I find it really jarring after driving the EV then going to auto and hybrid. The lag is extra noticeable in the hybrid cars and the regen braking feels like engine braking to me.
It's funny how people downvote someone's own personal opinion.
"I like this"
'No! You're wrong! You're not supposed to like that'
I wouldn't mind it as much if they provided some feedback to add to the discussion. But no, it's boo-hoo I'm a crybaby lol.
Nope.
Since covid it seems that resale value has become something important to people when buying cars?
Prior to covid it was never an issue, cars "depreciated as soon as you drive off the lot" and continued like normal. People drive their cars until end of life or an upgrade comes along and it gets traded in for peanuts.
The past 4 years people want their cars to be valuable and to resell them for close to what they paid for it 2 years later so they can upgrade to the next model?
Sorry to inform everyone, this is no longer the case. Even camrys depreciate 40% plus after 2 years. Check the sales figures and compare the prices as a percentage of drop from new.
If you're planning to buy a car and drive it for decades to come. Resale doesn't matter. And even if it did, if you do the research you'll see that the difference in manufacturers is a matter of a few percent.
Thanks for your comment
The MGs don't depreciate that much. Check prices!
It’s a 33k car, at least for this month - there’s not much room to depreciate compared to a 60 or 70k car. It still will, just not as much.
depreciation is so much
my wife claims i lost 100% depreciation after marriage :(
MGs are horrible cars. Drive a few different cars before you decide. New != Better.
Possibly true in general, but have you driven the mg4? Rear wheel drive, 50:50 balance, it’s surprisingly good, if just a touch floaty.
I got one for my two kids to share, main issue is wife and myself are always driving it. Bloody amazing car, zero regrets. But I purchased for around town, highway range is likely around 240km, so not the best.
Thanks mate … good insights
Where are those depreciated MG4s? Can't find them on carsales. Cheapest on sale is 25K (30K new) with 50K kms.
Fuel savings now, regret later!