My Novated Lease Quotation, Is It Worth It?

LMiles9925 on 28/11/2023 - 10:47
Last edited 29/11/2023 - 09:21 by 1 other user

Hello everyone,

The place I work just announced the partnership with Maxxia Novated Lease company.

My old Lexus is dying so thinking it could be a chance switching to Model 3 cheapest one.

I don't have enough money to pay in full so maybe choose CBA Secured Personal Loan or Novated Lease.

Below is the quotation I got from Maxxia, $1555 out of pocket really scared me and I saw others are usually paying $1200 or below monthly.

*Lease Term: 2 Years.
*Lease Type: New Car Lease.
*Lease Product Type: Fully Maintained.
*Total residual value: $38109.27
*Estimated annual km: 15000 kms
*Vehicel FBT Base Value: $63968.00

Total Amount Financed
*Car Price: $67406
*Upfront GST Savings: -$5815.27
*Financier's Establishment Fee: $437.82
*1st year Comprehensive Insurance (Maxxia arranged): $3640.02
*Lease Protection Insurance: $1976.49
*Total Loss Assit Insurance: $1521.89
*Total amount financed: $69166.95

Monthly Deductions
*Financed Payments: $2090.01
*Running Cost: $47.73
*Registration & Insurance: $69.57+$137.88
*Novated Lease fees & Charges: $23.86+$5.84

Total Salary Packaging Deductions: $2331.14
Estimated out of pocket: $1555.55

With CBA Secured Personal Loan the repayment is arount $1200 a month.

Any advise?

Thanks.

Automotive Novated Lease

Comments

  • Nugs on 28/11/2023 - 10:53
    +3

    "old Lexus"
    1990s LS400?
    .

    • Miles9925 on 28/11/2023 - 10:55

      2006 17 years old IS250

  • MS Paint on 28/11/2023 - 10:55

    Why only a 2 year lease?

    • Miles9925 on 28/11/2023 - 10:56

      Can't imagine I can stay here for 2+ more years…

      • MS Paint on 28/11/2023 - 10:56
        +11

        Then I wouldn't do a novated lease.

        Especially with this rort….

        *Financier's Establishment Fee: $437.82
        *1st year Comprehensive Insurance (Maxxia arranged): $3640.02
        *Lease Protection Insurance: $1976.49
        *Total Loss Assit Insurance: $1521.89

        • Miles9925 on 28/11/2023 - 10:58

          Right lol

          • MS Paint on 28/11/2023 - 10:59
            +10

            @Miles9925: It can get a bit messy if you decide to switch employers while having a novated lease and the new workplace doesn't offer novation.

            Any advise?

            You're going to fit in here just fine.

            • Miles9925 on 28/11/2023 - 11:08

              @MS Paint: The interest is 13.9%, if they can lower my out of pocket fee maybe $200 I am willing to do it..

              • MS Paint on 28/11/2023 - 11:09
                +1

                @Miles9925: More chance negotiating a better rate with CBA than a novated lease company.

              • lachhelix on 28/11/2023 - 12:16

                @Miles9925: 14% is very high - and I would never bother with a lease if it's only 2yrs
                Keep the IS (they're beautiful!)

        • toomuchdogfur on 28/11/2023 - 11:07
          +2

          Ask if you can:

          • Arrange your own insurance
          • Drop the lease protection and "total loss asset insurance" (wtf is this - isn't this literally what car insurance is for?)

          Then it might be more favourable.

          • Miles9925 on 28/11/2023 - 11:11

            @toomuchdogfur: Thanks, will ask them to adjust the quotation.
            The total loss asset insurance means when the car is total lossed, the insurance pay may be lower than Maxxia's total finance amount + balloon, so they have the insurace to cover that

            • The Hawk on 29/11/2023 - 09:30

              @Miles9925: This exactly. Since leases tend to be fixed amounts (and not interest-reductionable if you pay more as you go), the pay out figure on day 1 is likely to be far more than the car is worth. This "special" cover deals with that. Often worth it for the first year or two, but not so much if the agreed value with a different insurer covers the potential cost to you. $3,600 still seems very high though (although your age/location are unknown). How does that compare to private quotes?

              Also note that the CBA quote is only for the car itself, your cost includes fuel, maintenance, tyres and all runnings costs.

      • Euphemistic on 28/11/2023 - 11:25
        +4

        Just keep the Lexus then.

    • Gotchas on 28/11/2023 - 11:32
      +2

      One year is better. Get a quote

      The cheaper the car the better the lease becomes.

  • Gunther on 28/11/2023 - 11:02
    +4

    Don't do it!

  • jv on 28/11/2023 - 11:06
    +18

    Does It Worth It?

    Doesn't it not worth it?

    • Miles9925 on 28/11/2023 - 11:07
      -1

      I am not sure, I was looking at the others' examples they were paying out of pocket $1000-$1200, mine seems higher

  • Dollar General on 28/11/2023 - 11:07
    +3

    A wise man once said, if you can’t afford to but two of them, you can’t afford it

    • Miles9925 on 28/11/2023 - 11:09

      Nice point, maybe find something cheaper, maybe BYD Seal

      • jv on 28/11/2023 - 11:10

        Maybe keep your current car.

        • Miles9925 on 28/11/2023 - 11:11

          First thing my friends sit in my car will say I should change my car lol

          • jv on 28/11/2023 - 11:12
            +23

            @Miles9925: Keep your car. Change your friends…

          • MS Paint on 28/11/2023 - 11:17
            +5

            @Miles9925: So you would take on a crippling debt just to satisfy your friends? How odd.

          • brendanm on 28/11/2023 - 11:26
            +9

            @Miles9925: Your friends sound like d1ckheads.

          • Euphemistic on 28/11/2023 - 11:29

            @Miles9925:

            First thing my friends sit in my car will say I should change my car lol

            Well tell them you are going to, but you’re waiting for EVs to get better value. Just 2 more years.

          • Groovyuvi on 28/11/2023 - 12:10
            +4

            @Miles9925: So how much is your share per month for the payments when divided amongst all your friends?

          • localhost on 28/11/2023 - 13:37
            +1

            @Miles9925: Tell your friends Uber is cheap, get the … out of MY car.

          • carlJack on 28/11/2023 - 14:44
            +2

            @Miles9925: Keep your car just to piss off your friends

    • jv on 28/11/2023 - 11:09
      +1

      Wasn't that the guy who invented shoes?

      • MS Paint on 28/11/2023 - 11:11
        +4

        You're confusing him with the guy who invented gloves. Easy mistake to make. I do it all the time.

    • Daabido on 28/11/2023 - 12:19

      Sounds like the wise man was stupid.

  • burningrage on 28/11/2023 - 11:12
    +4

    Be aware, Maxxia's quote ALWAYS come up more expensive than other novated lease provided.

    I've tested BYD and Tesla Model 3 and they both come up far more expensive than necessary.

    Also if you are doing it for FBT free, be aware your novated lease will attract Reportable Fringe Benefit which may affect your govt benefit entitlements (at the very least if you have Private Health, it will elevate your Taxable Income).

    • JIMB0 on 28/11/2023 - 11:28
      +2

      They seem to want a large cut of your tax savings for themselves.

      • burningrage on 28/11/2023 - 11:43
        +2

        That's precisely my point

    • gwong on 03/12/2023 - 18:35

      Who do you recommend instead?

  • bobbified on 28/11/2023 - 11:12
    +5

    It doesn't worth it,..

    • jv on 28/11/2023 - 11:13
      +6

      I don't doesn't think it does not worth it.

      • MS Paint on 28/11/2023 - 11:16
        +7

        Nike should take this on as their new woke slogan

  • saltypete on 28/11/2023 - 11:13
    +6

    How dying is dying for your Lexus?
    If it can keep going - save the $1550 extra for 2 years. By that time with the range of EVs coming you will just about buy that M3 outright (2 yo) with those savings……😎

  • apsilon on 28/11/2023 - 11:17
    +3

    You really need to speak to your accountand to work out if the specific scenario makes sense for you but I'll mention one thing - you don't have to use their insurance (or any other service/item provider). I have no idea if $36xx is a good price for you or not but they quote on whoever they have a partnership with which may not be the cheapest or best. You will need comprehensive insurance but you can get your own quotes and choose your own insurer.

    I'd also question what Total Loss Assit Insurance is, I don't recall having it on my previous leases. Surely if it's insurance for the total loss of the vehicle then that's already covered under the comprehensive insurance.

    • gyrex on 29/11/2023 - 08:41

      My accountor advised against it.

  • Euphemistic on 28/11/2023 - 11:27
    +1

    If you are only considering a 2 year lease because leaving soon, don’t bother. Just keep the current vehicle. Repair it if necessary, but unless it’s got 400,000km on it it’ll probably keep going for 2 more years.

    • Daabido on 28/11/2023 - 12:21

      It probably will since it's a Toyota.

  • FoxJump on 28/11/2023 - 11:35
    +1

    you can get your own insurance and reimburse
    ask for market value
    confirm with Maxxia that you can substitute the car with another in case of a write off accident that your insurance company replaces it

    idk why you want all those extra insurances
    ask what their interest rate is

    good on you for a short period novated lease. less risk and liability for you

    • Miles9925 on 28/11/2023 - 15:06

      Their rate is 13.9.
      That was the default quotation I didn't know I can use my own

      • FoxJump on 28/11/2023 - 15:41

        ouchies! i remember my nvl in 2018 had a rate if 5%

        • Ade99 on 09/01/2024 - 07:48

          used to be under 4% till a few years ago

  • dogboy on 28/11/2023 - 11:40

    I would be embarrassed to drive an Elon Musk mobile these days.

    • redfox1200 on 29/11/2023 - 08:06

      yeah its super embarrassing to put your foot down feel the GGGGGG's

  • Drakesy on 28/11/2023 - 12:19
    +2

    Friends don't let friends take out loans on cars, novated leases though are somewhat more acceptable.

    IMHO get the interest rate out of them. Novated lease companies are a joke when it comes to transparency.
    They'll literally take your pre-tax dollars, claim you're saving x amount over the 3 years when in reality they're charing you 12-15% interest. Pretty much pilfering from the taxpayer to line their pockets.

    Shop around, i did and it was quite surprising how much they varied when you dug into it.
    Was going to lease a BYD Atto 3 for one year and buy it outright after to maximise the FBT, GST exemption and rebates. Looked into it and the first year was something like $15k pre-tax at 15% interest, basically $7500 in interest alone. Worked out cheaper to buy outright.

    • Miles9925 on 28/11/2023 - 15:05

      Thanks, I am giving up Tesla, the BYD Seal seems cheaper.

      So far have you found any warranty/customer service issue with BYD?

      • Drakesy on 28/11/2023 - 15:15

        Didn't end up going down the path as buying another car outright was the more financially sound option tbh.

  • onetwothreefour on 28/11/2023 - 13:13
    +3

    If you don't have enough money to pay for the car in cash then you definitely cannot afford to pay $1500 a month on a depreciating asset.

    • Miles9925 on 28/11/2023 - 15:04
      -1

      Spent a lot, thanks for your advice. Thinking to loan a cheaper car.

      • Drakesy on 28/11/2023 - 15:15
        -1

        IMHO don't take out a loan.
        buy a car you can afford with cash.

        Out of interest how old is the lexus?

        • Miles9925 on 28/11/2023 - 16:29

          2006, both interior and exterior are getting very bad

  • 6079 Smith on 28/11/2023 - 14:22
    +2

    Speaking from experience remove all the insurances and just do your own comprehensive that included new for old replacement for the first 2/3 years depending on the term of the lease (we went with bingle)

    I ran the number as many ways as I could when we went through Maxxia and it really just came down to the fact it was GST free which made it worth it

    • Miles9925 on 28/11/2023 - 15:04

      Thanks for your sharing!

    • Gotchas on 28/11/2023 - 17:11

      Not really gst free since the residue you pay back includes GST.

      It’s the pre tax running costs that make it a viable option

  • voo123 on 28/11/2023 - 22:42

    Novated leasing is often the way to go in comparison with a personal loan however Maxxia is known to have the worst ev novated leasing deal in the industry. See if you can get a lease with another company. Employers are usually associated with a few leasing companies.

  • gibspmuh on 29/11/2023 - 07:45

    I've done a couple of novated leases through Maxxia - just push back on everything.

    Ask for a lower rate on the lease (and make clear you'll walk if they can't do better) , bring your own comprehensive insurance (mine is always half the price of their offer or lower) and ditch all the secondary insurances/add-on's they try to bundle in.

    That should drop the monthly spend a couple of hundred at least for you. Usually I'd say negotiate your own car price as well rather than settling on their so called "fleet pricing" too, but that may be less relevant with a Tesla.

  • ValueBob on 29/11/2023 - 12:16
    +1

    People always want to buy things that they cannot afford; have to agree with @onetwothreefour.
    Generally, it is not a good idea to get a loan for a depreciating asset (i.e. a car). If you must, then redraw from mortgage (lower interest rate). Novated lease is no longer as attractive as it use to be.

    Missing in the equation is your personal circumstances and choice.
    Are you really going to buy a new car using a bank loan "to the maximum"? Really?? (it is not a wise decision) Really???

    This scenario is the assumption of the calculator; the baseline. If your answer is yes (i.e. that is what you plan to do anyway, with or without novated lease), then, the novated lease numbers is meaningful.

    • rickdwp on 29/11/2023 - 17:16

      EV interest rates are currently lower then a home loan

      • jacross on 29/11/2023 - 19:56

        Please explain.

        • rickdwp on 29/11/2023 - 20:54
          +1

          You can currently get loans to buy EVs with a lower interest rate then that of a home loan

        • voo123 on 01/12/2023 - 11:11

          https://horizonbank.com.au/loans/car-loans/green-car-loan/

          Green loan for new EV cars, 5.60% comparision rate (5.39% interest rate). It’s lower than pretty much 99% of current variable rate home loans.

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