Hello fellow Ozbargainers,
I'm currently in the market for a new car and am considering going down the novated lease option, I'm think I've finally gotten my head around how it all works, but the question remains is that is this a good option for me considering the following factors:
-current salary is $90k (gross before super)
-only average around 10k kms per year
-vehicle cost is around $40k
Just wondering if anyone can help me in my decision…
The better financial deal is to buy used, without a doubt.
Not necessarily so!
When we needed to replace a vehicle a few years back, we ended up leasing, as the total out-of-pocket expenses were far less than repayments alone on a $10 000 loan for a second-hand car. Then there would have been insurance and running costs on top of that, and any other nasty little surprises that were not evident at the time of purchase.
racerm911, the best advice you're going to get on this would be from the leasing company. They'll be able to tell you exactly how much you're going to be out of pocket post tax, and can help you find a car that suits your needs best, with the least cost to you. There is no obligation to use the service, so you'll at least have specific information on which to base your decision.
As you would normally do with any regular car purchase, check reviews and safety test reports on any car before making a decision.
Not sure why this guy was negged, his information is solid.
Consult an accountant and lease company, there are several types of lease options available.
There has been a few offers around lately of 1.0% interest and less (Mitsubishi as an example is offering 0.9% on the bulk of their range)which may work out cheaper.
I'm not up on current FBT rates, but Federal Labor has made them less attractive by phasing out the previous brackets. With such low km, I'm not sure you'd be in any better position than buying yourself. Some Novated Lease companies allow car to be up 4 years and 100Kkm at Lease commencement. Maybe a cheap finance deal may better suit?
A true OzBargainer will drive the cheapest thing their Ego can stand.
It is definitely a good way to not have to plan for anything financially in regards to the car. Some people re-novate the car at the end of the first period. My missus has one and only does 20k a year. It seems to be a good way to reduce your taxable income as the payment come out of your gross salary.
If you are going to finance, then novated leasing is a pretty good way to go. However, it's rarely as cheap as paying cash.
If going through a salary packager watch out for large commissions or expensive rates. Some employers may allow you to arrange your own finance. Most of the finance companies will allow you to arrange a novated lease directly with them provided your employer is happy to sign their paperwork.
Thanks guys for your comments
Do you have to buy a new car? Depreciation will cost c. $5k a year plus running costs etc. which all has to be covered by the lease. They also need to make the assumption you will thrash the vehicle, and build that in. And you will still be up for a residual after however many years.
The better financial deal is to buy used, without a doubt.
That said, with a leased car you get a hassle free car driving experience. If the monthly payments are worth it for you to have a new car that has all its running costs covered, then go for it.
I do think it is a really expensive way to pay for a car.