Novated Lease quote comparison - let me help you decide

Poor Ass on 16/05/2019 - 20:04
Last edited 17/05/2019 - 09:34 by 1 other user

Basically my background is licenced financial adviser specialising in novated leasing (10 years). I know all the tricks of the trade and all the dodgy stuff that happens in this industry.

I'm offering a service for those who have already got a quote or two from their employer's novated lease provider and going to proceed either way but not sure if they are getting a good deal.

I can help you compare the quotes and probably would be able to help you save hundred to few thousand dollars with what I know

General questions I could probably answer on the forum comments, complex questions you can pm me.

Mod note: Solicitation of payment for services is not allowed.

Financial

Comments

  • Quantumcat on 16/05/2019 - 20:11
    +5

    Q: how to save money on a novated lease?
    A: don't get one, pay cash or get a loan for the remaining amount after using your savings to pay as much as you can

    • GordonR on 16/05/2019 - 20:17
      +3

      It is more complicated than that because although you are borrowing, you pay some money out of pre-tax income and avoid certain other taxes.

      So it really depends heavily on your exact usage pattern and tax situation.

      (But I cant even work out whether it is worth it for me)

      • Poor Ass on 16/05/2019 - 20:51

        happy to have a look if you got quotes and the method of car buying if you were not doing a NL to compare

      • Quantumcat on 16/05/2019 - 22:30

        I think it would only be close if you had no savings (remember with a novated lease you are paying interest on the balloon the entire term) and like you said, incredibly heavy use to knock down your income by as much as possible. Plus you'd want to be in a high tax bracket.

        • Poor Ass on 17/05/2019 - 07:43
          +1

          Incorrect on the high tax bracket

          • Quantumcat on 17/05/2019 - 11:44
            +4

            @Poor Ass: Why? The more tax you pay per dollar you earn the more you can save by reducing your taxable income. If you are under the no tax threshold then there's no benefit?

  • schmuppet on 16/05/2019 - 20:46
    +1

    I've looked at getting a lease numerous times but it seems to be only worthwhile (versus using cash) if I do heaps of KMs or buy an expensive car. Is this generally the case?

    • Poor Ass on 16/05/2019 - 20:57

      The expensive car is definitely not the case especially when you get into depreciation cap limit and luxury car tax territory. Most cars I deal with are between $20k to $50k and done deals where clients drive only few thousand kms a year.

      Sometimes you can beat cash sometimes you can't. Sometimes people don't have cash and sometimes people like to use future money instead of existing money. So really depends on one's circumstance. PM me your quotes if you want me to compare.

      • schmuppet on 16/05/2019 - 21:14
        +4

        Is there a decent online calculator I can use? They all seem to conveniently hide the details and just show how much you'll "save".

        • Poor Ass on 16/05/2019 - 21:21

          afraid not. they all like to hide behind a smoke screen.

          but what you can do is calculate the cost of the purchase price + running expenses (use the same as the quote but make sure it's including GST. Most providers do ex GST on the running expenses because you don't need to pay GST on the expenses for the NL) for the lease term

          vs

          the decrease the take home pay on the quote for the lease term + residual payable

          This way you would know if it can beat cash or not beat cash by how much

          NL will beat car loans and personal loans hands down if the lease term gets completed.

          The other comparison is vs draw down on a mortgage if that is applicable

  • theHMASfriendship on 16/05/2019 - 21:25
    +3

    Can i novated lease an e-scooter?

  • Meho2026 on 16/05/2019 - 21:57
    +6

    Are you on here touting for business? Like a spam post
    Cant you be reported to ASIC and lose your license for providing financial advice without doing a proper risk assessment and individual analysis?

    I reckon this makes you look dodgy, youve already done an AMA on this subject
    https://www.ozbargain.com.au/node/447589

    Plus you even posted on here asking for financial advice or were you selling that too?
    https://www.ozbargain.com.au/node/447878

    • Poor Ass on 16/05/2019 - 22:21

      I'm not providing financial advice… that stuff is too expensive for the general population.

      In order to be financial advice or any sort of contract there needs to be commitment from all parties.

      What are you trying to gain shitting all over my post?

      • Meho2026 on 17/05/2019 - 08:37
        +1

        You are selling a service for a fee, youve just dressed it up to hide that.

        "If I manage to help you save a good amount of $$$ on the novated lease, I wouldn't mind some grocery money in return :)"

        Advertise on another website or post it as a deal

    • Imhereforcomments on 17/05/2019 - 01:36
      +6

      Sounds like an interesting tactic for OP to sus out quotes of competitors and drum up sales through PM via our OzBargain community……….

      • Poor Ass on 17/05/2019 - 07:45

        Not selling and so what if I can help people save money. You got something against money.

    • Some Guy on 17/05/2019 - 08:46
      +2

      "I wouldn't mind some grocery money in return :)"

      Looks like touting to me.

      • Poor Ass on 17/05/2019 - 09:18
        -3

        so what

    • b0b0 on 18/05/2019 - 19:22
      -1

      Not sure what you are trying to achieve here. It's a forum post and those who are looking at Novated Lease will find it useful, get some questions answered. It depends on personal circumstances (your tax bracket, how much cash you have, how you use car) like OP suggested so if you're a cash cow you are likely to have no intetest in this, if you pay for a car in cash then there is no interest involved, making it look like a 'better' deal than a Novated lease.

      I personally would find this forum topic interesting 2 years ago if I have not engaged my current financial advisor

      Ps: as much as the general public hate them, financial advisors look for client for a living. You can see this as a spam and OP is not expecting you to pay for this advice. People who get it will get it

  • Gandalf the Thrifty on 16/05/2019 - 22:21
    +1

    With leasing you still pay personal loan rates, so can't see how be much better off than tacking onto low rate home loan and increasing repayments?
    You get insurance, servicing and fuel (largest cost) pre-tax but you also get the fees for salary packaging. Supposedly the package companies can buy cars at better prices so that may even it a bit, but unless you moving into new lease you need pay residual payments at end of lease. Whereas you can pay a car off in 3-4yrs and own it outright.

    • Poor Ass on 16/05/2019 - 22:32
      +1

      NL interest rates are actually not the same as regular loan rates

      It's quite complex and I personally won't trust it besides from looking at the actually monthly lease payment itself.

      I would say add on a couple more % on top of the NL rate.

      Residual is always there at the end of the lease… it is the estimate capital to pay out the car handed down as a percentage by the ATO. I don't see why people are so concerned about a residual when you pay that at the end but with a loan you pay it throughout the term. I guess most people are shocked because they can't handle money and don't have enough to pay the residual at the end. E.g. loan $1000 each year for 5 years compared to $500 for 4 years and then $3000 in the last year. By the way you can re-lease the residual at the end and that residual actually goes down for the new lease term (e.g. by 55% if you re-lease 1 year). If you re-finance on a loan, you pay your repayments based on that payout amount.

      you really need to compare the NL quote vs other method of buying. NL not for everyone but it beats a car loan for sure. Cash and mortgage vs NL will need to be compared to know.

      NL product wouldn't be offered if there are no advantages

      • Quantumcat on 17/05/2019 - 07:37
        +2

        loan $1000 each year for 5 years compared to $500 for 4 years and then $3000 in the last year.

        You would pay a lot more than the $5k with the NL because you're paying interest on a higher amount throughout the lease

        • Poor Ass on 17/05/2019 - 07:46
          -2

          You just don't stop hey

        • Wyvernsridge on 17/05/2019 - 11:22

          you ~ get back to work! :-)

  • Ozbargainite on 16/05/2019 - 22:37
    +1

    My employer offers Novated Leases with Maxxia. From what I can see it lures people into cars they can't really afford which probably helps with staff retention.
    What do you think of Maxxia?
    They don't seem to get the discounts for customers they should from what I've seen but I could be wrong on that score.

    • Poor Ass on 16/05/2019 - 22:48

      They are kind of scummy but if you don't work for the government. Employer should offer you 2 providers to avoid exclusive dealings which is illegal in Australia.

      Car buying you quote them out and then just go to another dealer… anything around the redbook price would be nice but depends on the brand

      If you are serious about getting into a NL that's when I can offer you tips using your own providers to get a better deal

      • GordonR on 16/05/2019 - 23:41

        My employer only uses one provider, can you point me to something official about this not being legal?

        • Poor Ass on 17/05/2019 - 07:47

          ACCC read up on exclusive dealings. Third line forcing would be the one.

          Government and exempt organisation are not captured under this

    • apsilon on 17/05/2019 - 06:16

      I'll tell you what I think of Maxxia, avoid at all cost. I have a lease with them currently and they've been nothing but incompetent since day one. Rejecting claims due to balance despite having more than enough credit, stating they've paid claims but never actually deposit the money in your account, slow to process any enquiry, do nothing with your employers contribution for two weeks before crediting it to your lease. Will never use them again.

      • Poor Ass on 17/05/2019 - 07:48

        Yes that happens with them hands down. Expensive too.

    • brad1-8tsi on 17/05/2019 - 09:27

      I got my lease for the Skoda with Maxxia back in 2008. They were easy to deal with and didn't stuff things up.

      Their vehicle discounts weren't great so I organised my own deal. 2007 Octavia Elegence hatch 1.8tsi M6 for $30k drive away which was about 45k off RRP.
      I did a 1yr lease (because I wasn't sure if the car would be a POS). Then followed up with 2 yrs, then another 1. Initially I saved about $2k off my tax ($70k income) and a lot on fuel as I was doing 25k/pa. By the 4th year it was only a few hundred and Yr5 would have been <$100 so I bought the car for ~$9k.

      I still have the car.

      The biggest difference I see is that it got me into a new car when I would normally buy 2nd hand 3-5 yrs old.

      I probably wouldn't do it again as employment seems so unstable these days and I wouldn't like to be unemployed and stuck with a novated lease.

      • 22slurpee on 18/05/2019 - 14:26
        +1

        Wow, a Skoda Octavia that was worth $75k RRP? ("$30k drive away which was about 45k off RRP.")

        • brad1-8tsi on 22/05/2019 - 08:07

          LOL

          And this is why punctuation and decimal points are important.

          $4.5K

  • Dreddpax on 16/05/2019 - 23:15

    I'm currently in the market for a NL. I'm eligible with a number of companies. Can you give us an honest opinion of who you can recommend and why?

    • Poor Ass on 16/05/2019 - 23:23

      I haven't really met any NL providers that provides exceptional service (besides from myself lol) but if from pricing perspective Toyota Fleet Management in novated leases (you don't have to buy a Toyota) probably cheapest because their finance is from Japan and Japan is currently in negative interest rate. Banks actually charge the government and citizens to keep money with them so their NL can be cheap if you know how to negotiate. Not sure about service but as long as they set it up correct at the start it can't be that bad. If you get a quote from them, I could help you improve it before you commit.

  • Dreddpax on 16/05/2019 - 23:47

    Improve it how? By adjusting the standard quote they give everyone. This will be my third novated lease. I've kinda figured out they sting you by adding ridiculous things like tyre changes every 12 months or wheel gutter protection crap. Is that what you're talking about? And how much can you actually haggle with NL for the best interest via bank?

    • Poor Ass on 17/05/2019 - 07:35

      Nah don't add that crap

      Some haggling but depends on the quote

  • altomic on 17/05/2019 - 01:15

    can you provide an example of a NL?

    e.g. 2019 toyota camry through ABC lease company would result in payments of X per week/month and final residual of Y. and any associated costs.

    • Poor Ass on 17/05/2019 - 07:36
      -5

      No

      • altomic on 17/05/2019 - 09:55
        +3

        you can't even provide an example from a client you have previously assisted?

  • Wyvernsridge on 17/05/2019 - 06:28
    +1

    I am considering getting a Hyundai Kona EV on a novated lease. Basically, the savings on GST (and not paying for fuel!) as well as discounted lease financing from Macquarie Finance (0.7% below standard, through a deal with the Renewable Energy Finance Corporation). I do lots of kilometers per year (35k-40K)

    what are your thoughts?

    • Quantumcat on 17/05/2019 - 07:39

      You know you do pay for fuel right?

      • Poor Ass on 17/05/2019 - 07:42

        Probably will be charging up at home and can't claim the electricity

        • Quantumcat on 17/05/2019 - 07:45

          Oh right….you'd think you'd be worse off than paying cash then since the fuel isn't decreasing your taxable income. It would basically be a loan with a higher interest rate than a normal car loan where you can't pay it back early. You only save with a NL if you can do enough km to decrease your taxable income enough to offset the fees and higher interest rate, and you don't otherwise have any savings that could have gone into it

          • Poor Ass on 17/05/2019 - 07:49

            @Quantumcat: Incorrect at the highest level

            Again talking out of your arse

            • Quantumcat on 17/05/2019 - 07:59

              @Poor Ass: Why not then? Are you saying a novated lease has a lower interest rate than a normal car loan? Or that you can pay them back early?

              • Poor Ass on 17/05/2019 - 08:57
                -2

                @Quantumcat: why would you care you're never going to get a NL

                • Quantumcat on 17/05/2019 - 10:21
                  +2

                  @Poor Ass: You're the expert - if I'm wrong you should be able to articulate why

                  I was going to get one at the start of this year until I read into it more thoroughly, ended up paying cash.

      • Wyvernsridge on 17/05/2019 - 11:20

        got solar and battery at home, and can charge at my work if it comes to it. Don't plan to pay for electricity.

    • Poor Ass on 17/05/2019 - 07:41
      +1

      If the purchase price was a bargain it might work but EV cars at the moment don't resale very well. If you are planning to keep for good then it can work out.

      MACQ is the go to financier when people can't obtain finance. They approve anythung. Sometimes good lease repayments but not the best atm, deadly on fees if somehow they don't get their $

      Should work out if your NL provider do it right

  • 2jzzzz on 17/05/2019 - 07:26

    My situation is this. I've come into a reasonable amount of money. I'm shopping for a car around $40,000 second hand which shouldn't depreciate too much further. I could just buy it with cash, but figured I could lease it and gain the tax benefits, then after the 2 year lease pay the balloon. I liked the idea of keeping the lump sum of cash in my account rather then spending it all straight up. I work for the government and Smartleasing seems to be the exclusive company. I won't be doing huge amounts of kilometres, probably between 5000 and 10000 a year. The car is very heavy on fuel and tyre usage though, the tyres are expensive.

    Does this all sound like it'd be worthwhile for me?

    • Quantumcat on 17/05/2019 - 07:41

      I liked the idea of keeping the lump sum of cash in my account rather then spending it all straight up.

      The interest rate on the NL is going to be loads higher than any savings account

      • 2jzzzz on 17/05/2019 - 07:44

        I get that and the interest earning potential when holding onto the cash isn't the main reason. Getting on a lease I get GST from a dealer sale refunded, It'd also drop my taxable income, no tax on fuel, tyres, servicing, rego and insurance.

        • Wyvernsridge on 17/05/2019 - 11:24

          plus, dropping my taxable income gets me in the income bracket to take up Labor's offer of another solar battery.

    • Poor Ass on 17/05/2019 - 08:59

      it can be but the information is very general

      so next thing to do is get a quote from them and compare (don't be pressured to go ahead, their sales are pushy)

  • DBBROS on 18/05/2019 - 14:03
    +1

    What do you think of Lease Plus ?

  • mousie on 18/05/2019 - 14:26
    +2

    Not this guy again..

  • lexxyacc on 18/05/2019 - 16:06
    +1

    OP, why NL and not an Associate Lease?

  • TimeWaster on 18/05/2019 - 18:37

    I have been thinking of getting a McLaren on a NL for a little while now as a family member had purchased an Audi with it and said it was more financially beneficially because of some tax workarounds. Honestly, I’m not too sure how it would work, as it makes much more sense in my head to get it in cash. I’m assuming if I increase the balloon payment at the end, it would decrease the loan repayment I’d make and then I could just trade in to the latest sports car at the time after the 5 years?

    Could you provide some insight on how using a NL could work out cheaper (if it would), included tax reductions and whatnot, if I just wanted to have a ‘fun car’ on the side to keep upgrading? Or could you just explain how it works out cheaper at all?

    Thanks

  • DR-JEKL on 18/05/2019 - 22:00

    IS there any specific brand which is a top choice for leases for a $40k vehicle? i.e good resale, reliability etc or is it mainly dependent on the customers choice?

    Whats a typical p/m payment on a lease for a $40k vehicle? (guessing too many factors to really quote it?)

  • wiltonson on 24/06/2019 - 12:15

    Hi Charuzu

    I got 3 NL quotes here and need help deciding which is the one I should go for. The way their data presented are different so it's hard for an amateur like me to compare the best NL deal.

    Please can you PM me your email and I'll forward you all 3 quotes? I think I know which one I should sign up with but I want to hear your assessment and recommendation.

    Thanks

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