Novated lease

[Coldtopper]

Anyone got any idea about this. The new job wants to go down this path or is it best to take the coin & buy a cheap 20k banger myself. Google is divided thanks in advance.

[Sydney Hacker]

Anyone got any idea about this. The new job wants to go down this path or is it best to take the coin & buy a cheap 20k banger myself. Google is divided thanks in advance. I think the canuck is the local expert on novated leases, maybe shoot him a message.

[Coldtopper]

I think the canuck is the local expert on novated leases, maybe shoot him a message. cool thanks for tip.

[Johnny Canuck]

cool thanks for tip.

Shoot me any questions you might have. If you want to discuss it, happy to send you my mobile.

[backintheswing]

With novated leases I have had in the past, all servicing, tyres, fuel, windscreens etc come out of your pre tax salary.

Depends on what you think you will do a year in kms.

[Peppas]

How many ks do you need to do a year to make it worthwhile?

I believe the rate per km is the same these days regardless of how many you do? But I guess there would be a minimum amount which would make it worthwhile?

[Johnny Canuck]

How many ks do you need to do a year to make it worthwhile?

I believe the rate per km is the same these days regardless of how many you do? But I guess there would be a minimum amount which would make it worthwhile?

The more that you drive, the more savings you'll get as you can put more running costs through pre tax.

You are correct, there are no longer any km brackets.

There really isn't a minimum to achieve savings, you should save even if you are only doing 5000km a year.

[Peppas]

The more that you drive, the more savings you'll get as you can put more running costs through pre tax.

You are correct, there are no longer any km brackets.

There really isn't a minimum to achieve savings, you should save even if you are only doing 5000km a year.

When you say save, are you talking about vs purchasing a car outright and paying all running costs?

[Johnny Canuck]

When you say save, are you talking about vs purchasing a car outright and paying all running costs?

Yes.

You save a good amount on income tax, as well as saving the GST on running costs and the GST on the purchase price of the vehicle, as long as you aren't purchasing privately.

[Peppas]

Yes.

You save a good amount on income tax, as well as saving the GST on running costs and the GST on the purchase price of the vehicle, as long as you aren't purchasing privately.

So from what I understand, I can still novate lease a 2nd hand vehicle purchased privately right? Sell it to the novate lease company and then start a lease?

Sorry, I have been contemplating a novated lease vehicle for awhile :)

[Johnny Canuck]

So from what I understand, I can still novate lease a 2nd hand vehicle purchased privately right? Sell it to the novate lease company and then start a lease?

Sorry, I have been contemplating a novated lease vehicle for awhile :)

Yes. That is what they call a sale and leaseback.

[Peppas]

Yes. That is what they call a sale and leaseback.


Do you work for a Novate Lease company JC?

[Johnny Canuck]

Do you work for a Novate Lease company JC?

I used to work for a couple of them.

[3Puttpete]

Fuel cards are awesome

[Johnny Canuck]

Fuel cards are awesome

With my recent change of jobs, I have had to change novated companies. I can't wait until my new cars arrive.

[Peppas]

Do you reckon theres a price point that makes this more worthwhile or less worthwhile?

Ie if I was looking to get a car in the 40k-50k price range, vs purchasing it 2nd hand a year or two old in the 30k price range and then sellback and lease?

[Johnny Canuck]

Do you reckon theres a price point that makes this more worthwhile or less worthwhile?

Ie if I was looking to get a car in the 40k-50k price range, vs purchasing it 2nd hand a year or two old in the 30k price range and then sellback and lease?

Everything over about 10K should see benefits, you would still see a benefit for less than that, but none of the companies would lend less than 10K in most cases.

The higher the value of the vehicle, the more you pay pre tax and save.

Purchasing from a yard also sees the upfront GST savings, which is substantial. You have to pay GST on the residual, but there is still a massive upfront savings.

In saving the GST, you also save on not having to finance that amount over the lease term.

[Peppas]

I think I am confused about this all now... plus I had a look at the smart leasing online calculator and it confused me even more, particularly the part where I have to pay more for being a particular employee... maybe I will flick you a PM later on JC. Thanls for answering all my questions!

[Dangals]

Question for you JC - Considering I have a motorpass card that I can use for everything from fuel, tyres, service etc. that work covers I assume that novated leasing is not really a benefit for me... I like the idea of saving GST etc and the pre-tax income savings though.

[PeteyD]

Pretty sure you can just novate the purchase with whatever work does not cover (insurance, rego etc).

[Johnny Canuck]

Question for you JC - Considering I have a motorpass card that I can use for everything from fuel, tyres, service etc. that work covers I assume that novated leasing is not really a benefit for me... I like the idea of saving GST etc and the pre-tax income savings though.

You would be best to get a quote from your employers novated company and see what they project the yearly benefit to be.

With the majority of your running costs covered, the benefit would be significantly decreased.


Pretty sure you can just novate the purchase with whatever work does not cover (insurance, rego etc).

Petey is spot on.

[Johnny Canuck]

I think I am confused about this all now... plus I had a look at the smart leasing online calculator and it confused me even more, particularly the part where I have to pay more for being a particular employee... maybe I will flick you a PM later on JC. Thanls for answering all my questions!

No worries. I am confused about you having to pay more for being a particular employee.

If you pm, make sure you explain that bit.

[markTHEblake]

Anyone got any idea about this. The new job wants to go down this path or is it best to take the coin & buy a cheap 20k banger myself. Google is divided thanks in advance. You might be looking at this backwards. The first decision to make is how much you want to spend on a car and what car you want because the bottom line is, you are still paying for depreciation and the lease interest . If it's a new car or used up to about 3 yo, then a salary sacrificed lease is the cheapest way to go, no debate. However if you prefer to drive a beat up old $2k ute the smart thing is to just take the extra salary in your pocket.

[WBennett]

I've driven my last few into the ground after buying used.
Now I am considering new/near new, novated lease is the way to go.

[markTHEblake]

I used to work for a couple of them. Do you know which ones have the cheapest fees, that's both the monthly admin and the leasing costs. Almost every online calculator I have ever used doesn't disclose them. Then when I ask they give bullshit answers like I still save more money and still avoid disclosing fees.

[Johnny Canuck]

Do you know which ones have the cheapest fees, that's both the monthly admin and the leasing costs. Almost every online calculator I have ever used doesn't disclose them. Then when I ask they give bullshit answers like I still save more money and still avoid disclosing fees.

The majority of the large companies will gouge the hell out of you. The philosophy always seems to be: we are providing a benefit so we can take a lot of that and you'll still save.

My former employer, Aspire Benefits Management are the fairest that I know of and I would recommend them to anyone.

Their rates are extremely competitive and there is only one management fee; no management fee + admin fee, which are the same thing and just a way to charge you twice.

Some other companies are completely dodgy and claim to give you discounted fuel, yet they keep the discount for themselves, they charge a surcharge on all maintenance work, etc.

One company I worked at pretty much provided me a scripted response to quote whenever I had an interest rate query.

[markTHEblake]

Haha. I always ask the interest rate, they NEVER reveal that. For flips sake, that is a cost that I have to pay. :-)

[Johnny Canuck]

Haha. I always ask the interest rate, they NEVER reveal that. For flips sake, that is a cost that I have to pay. :-)

They never reveal it because they load up on commission, which skyrockets the rate.

Every company is paying around ~6% for their money and they make their profit on whatever they add in commission.

At one company, I was told to only add commission that would take the rate to 17% as once it got over that, the financier received the additional benefit and not the leasing company. As all sales guys are remunerated on how much they can put into deals, you get some real Cowboys.

A couple percent is fine as the novated company needs to make profit as well. However, there is a limit.

[Coldtopper]

Thanks for the read JC. Im @ $120k+ per year and will drive 50k klm a year. Would buying a fuel efficent car going to save me dollars or wouldnt the savings be noticable. Novated way to go?

[markTHEblake]

Do you have to make a post tax contribution (ECM)? If yes you will save more money the higher the running costs are compared to the price of the car, because the ECM is based on the cars value. Ie you will save a bucket load if you buy a Kia Rio 3 door and drive 50k a year. But a dumbass buys a BMw and drives it 10k a year

[Johnny Canuck]

Thanks for the read JC. Im @ $120k+ per year and will drive 50k klm a year. Would buying a fuel efficent car going to save me dollars or wouldnt the savings be noticable. Novated way to go?

On those numbers by themselves, novated is a great option.

A fuel efficient car would save a bit, but driving that much, you want the most comfortable ride, first and foremost.

[Coldtopper]

On those numbers by themselves, novated is a great option.

A fuel efficient car would save a bit, but driving that much, you want the most comfortable ride, first and foremost. Thanks JC. Thinking cx 5 or Forrester d

[PeteyD]

Would be interested to see the figures on a cx5

[Johnny Canuck]

Thanks JC. Thinking cx 5 or Forrester d

I novated a CX5 for my wife a little over a year ago. She loves it.

I really liked the Forrester myself but with having to buy two cars at the time, it fell out of the price range.

[Grunt]

When I was with Qantas I found the key was to get a car that was not too common that once the lease was over you could make a slight profit. Saw a few guys buy run of the mill cars and situations changed where they had a car that the lease payout was higher than the value of the car.