Convince me

[XR6_661]

About a novated lease.

So I have the opportunity through work to purchase a new vehicle...

It's a lease arrangement where the car is in my name and the money for the car payment, regos, insurance, fuel (I get a fuel card) is deducted from my salary before I see my pay...

Seems like a pretty good system...and I know my job is secure and I'm in for the long haul here.

So, anyone done this that can list the pros and cons of the system?

I'd probably be looking at either an FG XR8 or XR6T....

[Black F6]

make sure you do at least 25,000kms a year, otherwise benefits might not be worth it, the FBT will be too high

[Iggypoppin']

Do you get the option to trade after a few years?
As above, make sure it's worth doing in relation to driving, you don't want to be doing 10,000klms a year with a novated lease vehicle.

[flappist]

Originally Posted by XR6_661

About a novated lease.

So I have the opportunity through work to purchase a new vehicle...

It's a lease arrangement where the car is in my name and the money for the car payment, regos, insurance, fuel (I get a fuel card) is deducted from my salary before I see my pay...

Seems like a pretty good system...and I know my job is secure and I'm in for the long haul here.

So, anyone done this that can list the pros and cons of the system?

I'd probably be looking at either an FG XR8 or XR6T....

You realise that you will not be able to mod it in any way whatsoever as you do not actually own it, the lease company does.

[Ducati888]

Novating is not worth it if you already have a good car that's worth something, isn't too old and you just want to update to something more shiny. If you do go ahead, it is of far greater value to choose a car that's actually worth something at the end (greater than your balloon payment). If you buy a Ford this won't be the case. The real value in Novating is when you trade the vehicle at the end for more than you owe on it.

If you don't have a good car, it's a great opportunity to get one at a slight advantage over paying post tax dollars, but the gain is not brilliant depending on your tax bracket.

You most likely will have to make a contribution other than just running costs - this is the up front method of paying FBT. As BFXRScott said - you need to do more than 25,000k's to make it worth it, otherwise all you do is shift from (assumed) $0.33 tax in the dollar to $0.20, and this gain is in running costs and lease payments only.

I'm in an "associate lease" at the moment which is slightly different, but fundamentally the same concept. The gain is only $30 per week post tax, which is about one tank of LPG.

You will still be outlaying $17K- $20K pre tax. Is it worth it? You need to do your sums. Get the prospective fleet company to send you the calculator they will no doubt have, or get on line to FleetPlus, who have one on their website.

Good luck with it.

[TZENU]

Works very well if you fall in one of the top tax brackets..

[nang3]

ive been considering this as well, been emailing figures and **** with the lease company and it looks like even if i do 15k kms a year i will still be about $3500 better off overall for the year???
surely im missing something in the calcs??

https://dspack.catch-e.net.au/client...=VehicleSearch

G6E Turbo for $40k doing 15,000kms per year, salary at 60-80k

what am i missing???

[nang3]

just looked at the fleetplus calculator, get totally different results??? need to do more research into the FBT implications me thinks as i have no friggen clue!

[bangm001]

My old man purchased my ladies EF falcon through a 3 year novated leave. We bought it for around 12K when they were still selling for 18K at the time, also got the classiv model for no extra (air con, cruise, alloys etc). So worked out pretty good for us. HOWEVER.. If the car gets pranged within the 3 years, you still need to buy it.. And if you leave jobs within the time you need to pay the car out in full (Which if you cant get hold of 20+K at the time might see you struggling). Also make sure that you will be the only one driving the car.

[Black F6]

Novated lease travels with you, if you change jobs

[Brazen]

The best bit of advice I have ever been told is to only lease if you were going to buy a car anyway, ie dont get a lease if you had no interest in buying a new car with a bank loan or cash.

Also Fords tend to have really good fleet deals, so what you lose in resale you gain in initial purchase price (which saves on interest as well)

[Mr Hardware]

I have seriously investigated novated leasing through my work. I have a few conditions about it:
1. Only do this if you can't put up with your current vehicle any longer, for whatever reason
2. Only do this if you were going to get a loan anyway, or if you are going to cleverly invest the money you would have spent on the car
3. You don't HAVE to do over 25000k a year, but it's worth about $1500 to you if you do, as opposed to 24999k.

Y'see, as part of the package, they charge about 14.5% interest on the deal.
At the end of the day it turns out to be more or less just an interest free loan.

There is one way you can 'win' with it though
the lease companies have fairly pessimistic depreciation figures, ie 45% residual after 3 years
So if you get yourself something that holds its value well, and say the payout figure is $14k but your car is still worth $20k, Sell the car, payout the residual and pocket the rest!

[Black F6]

Dont forget that profit is assessable income

[XR6_661]

Scrap that guys.

Just got made redundant =(

[MYVYSS]

Originally Posted by XR6_661

Scrap that guys.

Just got made redundant =(

famous last words from 2 hours ago..

Seems like a pretty good system...and I know my job is secure and I'm in for the long haul here


Wow two hours is a long time in the world it seems..

At least you could probably afford to buy one outright now..

Sorry to hear about your job.

[JimNiki]

Originally Posted by XR6_661

Scrap that guys.

Just got made redundant =(

and I know my job is secure and I'm in for the long haul here

?????????????????????????????????????????????????? ??????????

man! what's going on! I'd be horrified!

[XR6_661]

Boss said it came as a shock to him too.

He just got the letter from head office this morning that my position was picked...

Only a small office up here in Cairns...7 of us.

Ah well, maybe I jinxxed myself?

Comes as a big shock to me! Definatly didn't expect it...Get a payout figure next week...In the mean time, looks like I'll be looking for work!

[Smoke Pursuit]

Originally Posted by flappist

You realise that you will not be able to mod it in any way whatsoever as you do not actually own it, the lease company does.

And how many lease companies actually come and inspect the vehicles?? LOL.

[Ducati888]

Originally Posted by nang3

just looked at the fleetplus calculator, get totally different results??? need to do more research into the FBT implications me thinks as i have no friggen clue!

You have to make a post tax monthly FBT up front contribution. That may be where you are going wrong.

It comes to about $6K per annum, or roughly $500 per month on a car worth $40K.

[Ducati888]

Originally Posted by BFXRScott

Novated lease travels with you, if you change jobs

Only if you move to a company with a car plan that's willing to sponsor it. Novated leases and tax breaks work through company payroll and ABN, otherwise you have to self fund it.

[Brazen]

Originally Posted by XR6_661

Boss said it came as a shock to him too.

He just got the letter from head office this morning that my position was picked...

Only a small office up here in Cairns...7 of us.

Ah well, maybe I jinxxed myself?

Comes as a big shock to me! Definatly didn't expect it...Get a payout figure next week...In the mean time, looks like I'll be looking for work!

Sorry to hear that. Hopefully the payout will give you some time to have a break and then find some new work.

[Black F6]

Sorry to hear mate, just never know do you

[Magna]

Originally Posted by flappist

You realise that you will not be able to mod it in any way whatsoever as you do not actually own it, the lease company does.

you can as long as its road worthy just keep the old parts. i know i've claimed new wheels cause the old ones got "damaged" and the lease covers the repair/replacement of parts

otherwise just order the car with the options you want.

[Fled74]

We got our car via a novated lease. Finally paid it off last year (residual was about $7000). It was a relatively painless process - I'd do it again if I wanted another car.

[nang3]

Originally Posted by Ducati888

You have to make a post tax monthly FBT up front contribution. That may be where you are going wrong.

It comes to about $6K per annum, or roughly $500 per month on a car worth $40K.

so on the fleetplus site i chuck in say 65k income, 3 year lease on a 40k large car, 15K kms in WA and tick all 3 boxes...

it gives a Monthly lease of $1,342 and an employee contribution of $7,577 annually, $631 monthly.

so does that mean that $711 ($1342 - $631) comes out of my pre-tax salary and the $631 has to be paid post tax?

interesting that once the KM's hit 25k the employee contribution drops by $285 a month.. defo need to hit that mark for max savings..

**** they make it too complicated haha

[Ducati888]

Originally Posted by nang3

so on the fleetplus site i chuck in say 65k income, 3 year lease on a 40k large car, 15K kms in WA and tick all 3 boxes...

it gives a Monthly lease of $1,342 and an employee contribution of $7,577 annually, $631 monthly.

so does that mean that $711 ($1342 - $631) comes out of my pre-tax salary and the $631 has to be paid post tax?

interesting that once the KM's hit 25k the employee contribution drops by $285 a month.. defo need to hit that mark for max savings..

**** they make it too complicated haha

Yes that's right - the 631 is post tax, and basically covers the FBT and income tax at your specified level up front.

As someone pointed out earlier - novated leases are only worth it if you really need a new car. If you already have a good car they are a waste of time - you could invest $631 per month post tax in so many more beneficial ways.

It's always a mistake to consider a car an asset. Very few are. They are a liability because they cost money in every sense, every day, unless they can be deducted such as a work van.

[nang3]

^^ well im selling mine at the moment to get into something newer so im thinking normal loan etc vs novated the novated shiould be the better optoin?

[seduced_xr]

sorry to hear about your job, i had just bought my xr6 when i lost my job took me 4 months to find another one. cars now only just getting back up to scratch,

good luck with the job hunt

[MITCHAY]

Originally Posted by XR6_661

Scrap that guys.

Just got made redundant =(

Been there and done that. It sucks mate, hope you get a good payout. Job market is a lot better than what it was though so that's a plus.

It really sucked trying to find one last year believe me :

[JimNiki]

I started a new job this year.
My previous company went belly up and after 15 years of service I lost the equivalent of a new GT-P!

Life goes on!