I’m wondering if anybody knows/or has had a novated lease on a car before?
I’ve currently got a car that I was stupid enough to get a personal loan (not a car loan) for, and I’m paying ridiculous amounts of interest. Now that I’ve realised this, I’ve got the option of simply re-financing at a better rate - or going for a novated lease.
The lease appeals to me because it does including the running of the car/servicing etc - I’m also thinking of trading in the car for a newer one too. Also, the tax benefits are obvious because you’re salary packaging the car and paying it pre-tax.
Be careful on lease costs, in situations where you are paying a leasing price for a new car during the course of the lease, without reflecting depreciation.
Pay for your car upfront. If you can’t afford the car you want, buy a cheaper car. Or take the bus.
Getting any sort of a loan for a car is not smart. You’re paying interest on something that is rapidly depreciating in value.
Never, ever buy a new car. 1 - it loses 15ish% of its value the second you drive it off the lot, and 2 - you’re buying the car for the period it is actually most likely to fail. Buy a 2ish year old car instead, the failure rate is much lower, the price is way cheaper and they’re even still within warranty most of the time.
So many awesome second hand cars out there. Get a 2000’s X5 in good nick under 15k, fix any niggles yourself with Google as your friend. Typical annoying non answer to your question I know, but we’re mad with our new cars every two years habit.
I already have a loan so the lecture about never buying a car won’t really help, though I understand the theory. Re-financing the loan seems the no brainer, whether I take the ‘upgrading the car’ option through the new loan or a lease was more the question…
Went through this recently for a new work car. I spoke to our accountant about it and he preferred finance ( car loan) over a lease. Leases used to be a no brainer but the government has cracked down on what can and can’t be claimed/depreciated on the vehicle.
Car finance loans are so cheap right now too, most are between 4-5%. If you’ve got any money at all then add that to begin with and you’ll have a smaller loan. If you chose to add a balloon option at the end of the loan terms try and make it as small as possible so you don’t have a huge payout at the end.
Unfortunately since the benefits of leasing have been wound back it comes down to doing the sums on the different options and working out the best option given your circumstances.
I looked at it 3 years back and the lease was the better option if I: (1) selected certain makes and models which the leasing company got better deals on as they bought more of them; and (2) had a longer lease term (5 years).
I ended up buying outright rather than leasing simply because if I’d left my job before the end of the lease term I would have incurred a bunch of costs either novating the lease or paying out the lease. It was the right decision for me because I did end up leaving that job before the longer long term would have expired.
Novated leases are ultimately expensive. One of our staff took a novated lease and he continually got into issues with driving too many kms. We were giving him a car allowance, but after looking at the sum, it was better for for us to lease car and deduct it thus way as a pretax allowance
We have been leasing cars for the past twenty years, and keep the log book for the required periods and then claim all the deductions for fuels, service etc.
Just replaced my Lexus with a new one, and they offered 1% leasing terms over four years which was too good to refuse. Most car companies offer these great rates. So if you use your car for work and can justified expenses according to ATO rules then lease it.
Originally Accountant suggested Commercial Hire Purchase so we could claim GST back in a lump sum, and it is an option if you can do this, but with the lease we can claim GST refund monthly which suits us OK. Benefit of having a company .
Also, if you work for a big company you can often buy off the fleet guy at the dealership. This person is different to the one standing in the showroom who sells to the public.
Or, if your company utilises the services of a fleet management company, hit them up (the fleet company) to get you a quote. It’ll likely be a better price than you can negotiate in person, and they can probably deliver it to your house.