Car loans, novated leases, commercial leases what is the best way to financially befenit from buying a car

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  waterstone on 29/10/2013 - 15:32

  I'm not sure about the rest, but the benefit of novated leasing would include:

  • Ability for the novated leasing company to obtain a cheaper price for your vehicle. They are able to do that as they purchase a lot of cars.
  • Part of the novated lease repayment is in pre-tax dollars. This means that, you might get 'bumped' down into a lower tax bracket for income tax.
  • You obtain a GST saving on purchases depending on the GST recoverability rate of your employer

  You should ask the novated leasing company for a quote and look at your income tax situation to see whether the tax savings are high enough to offset the implicit interest rate charged by the company.

  Hope that helps

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    sloshie on 08/11/2013 - 20:09

    Always try and see what price you can get yourself as well. I beat the quote my NL company was able to achieve - from the same dealership! :)

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  Archi on 29/10/2013 - 15:48

  can anyone recommend a novated leasing company ???

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      drewbie on 30/10/2013 - 09:35

      My novated lease was through Fleetpartners, and my experience was generally okay. The one really poor experience was when they took 4+ months to resolve the insurance claim after I totalled my car last October. They seemed to be going through some growing pains, because no one knew anything. Promise after promise, until a supervisor finally got my case and had it resolved within a week. On the upside, I got a big chunk of money back at the end AND they wrote off a couple thousand I would have owed due to the early termination of the lease (about 14 months in). I sure miss my Golf… :(

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      conan2000 on 15/12/2013 - 22:20

      Agreed. Speak to your accountant to work it out. I ran some number (my work uses fleet partners for novated leases) and I couldn't see the benefit in a novated lease. It depends how much you earn and how much you drive. If you're 45% income tax bracket and driving a fair amount, it could be a good option. If you're in the 37% or less bracket and only driving 10k kms per year, then a good chance any benefit would be marginal.

      In regards to the commercial leases/chattel mortgages, you would need an ABN to take these out, so not sure if it's an option for you.

      If just taking a standard loan, shop around, a dealer or broker is unlikely to be able to get you the best rates as they will take a margin over the finance company. Try calling the finance companies direct first and see what they offer so you can see if a car dealer or broker can get close or beat it.

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  _Bruce_ on 29/10/2013 - 15:53

  +1

  what is the best way to financially befenit from buying a car

  To not buy one. There are ways to reduce the impact but you never benifit from buying a car. If you have one that works replacing it shoud only be done because you want to, not because you think you will benefit somehow.

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  Archi on 29/10/2013 - 15:57

  I understand what your try to say,.

  i'm in the market for a new car and was just wondering what would be the best way to purchase the car.

  the best way I know would be cash but I don't have 50K

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    _Bruce_ on 29/10/2013 - 16:03

    Best way is not always upfront payment, it depends on a lot of factors (income, investment return rate, tax situation.

    Personally though, if I didn't have 50K, I wouldn't be in the market for a 50K car.

    As mentioned, get quotes for different options, better option than providing all your tax details publically on the internet.

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  Ade99 on 16/06/2019 - 17:36

  A loan at a low comparison rate (say 4.5% ) can be much better than paying cash for a depreciating asset. If used in a business the interest can be deducted as an expense whilst the cash is left to buy assets which will be revenue earning eg tools.