Does salary sacrificing a car work out cheaper if you don’t need finance? Or, would one be better off purchasing a car with savings (I.e., no loan) compared with going through a novated lease? The information on the Novated lease is ambiguous when it comes to comparing these two scenarios.
Other details:
Car purchase price $35,000
Km travelled per year: 15,000
Gross annual salary $90,000
Thanks
The 1 year old car will be worth just $23000 after a year. Might be better to buy a 2 year old car.
The 2 year old car will be worth just $19000 after 2 years. Might be better to buy a 3 year old car.
True, the biggest cost is depreciation.
Yep, if you don't factor in the included stamp duty on drive away prices 😉
Is the car a tax deduction or just for private use?
Private use
It can depend on the interest rate being offered on the loan.
We spoke to a dealer recently who would finance at 2.7%. This is less that my home loan rate, so it's better for me to leave my cash in my offset account and take the dealer offer.
^^ THIS! You can ask what the rate is that the novated lease gives you too!
You can also novated lease anycar that is > $10000. so it might be worth looking at a 1 - 2 year old car, and then put it on novated for peace of mind (servicing, petrol, rego, etc).
Also remember that most novated lease companies will let you structure your lease better, so you can choose not to pay for things like tyres and carbon offset.
Your 35000 car will be worth 28000 this time next year, might be better to buy a 1yo car now?
In general cash > salary sacrifice > loan