Novated Lease vs Dealer Finance vs Bank

Ljaesoonee on 12/01/2024 - 16:17
Last edited 15/01/2024 - 08:52

Hi all,

Seeking your collective advice on my current situation.

Have been on the waiting list for a Lexus NX350H since 2022, got affected by the chip shortages and have been finally notified its due to arrive in March so looking at the best option if we exclude a full cash payment. Upgrading due to the kid getting too big for the sedan with a baby seat

$160K salary exc super, $40k in savings, Will sell/trade in current car (2017 Audi A3). $15k yearly contributions to super for FHSS via salary sacrifice, no HECS
Estimated 8k-10k km driving a year.

Employer is partnered with Maxxia as their Novated Leasing option and has provided the following quotes.

Total Amount Financed: $87,412.27
9.29% Interest Rate with Macquarie
Removed all insurance options (Lease Protection, Guaranteed Buy Back, Extended Warranty, Total Loss Assist)
Running costs are set to $72.73 (Fuel), $90.83 (Rego), $113.64 (Comprehensive insurance) per month

Other bits noted in the quote (all monthly):
Novated leasing fee: $5.91
GST on ECM: $125.84
Luxury car depreciation allowance: $75.60

1 Year with NL
Residual Value: $58,635.611
Pre-tax deduction/per month: $2,012.92
Post-tax deduction/per month: $1,384.24

3 Year with NL
Residual Value: $41,883.85
Pre-tax deduction/per month: $773.50
Post-tax deduction/per month: $1,384.24

Other options being considered with longer terms (less hassle if changing employers) are;

  • Trade-in Audi with Lexus as deposit and finance via dealer direct the remainder with balloon or no balloon via fixed rate loan. (Removes trouble of balancing no car until the new one arrives).

Balloon: $880/mth ($25k deposit @ 8.7% over 4 years)
No Balloon: $1,750 ($25k deposit @ 8.95% over 4 years)
* Car loan via bank
$2,152.94 (assuming $20k deposit @ 8.49% over 3 years)

Is a novated lease option still better off given the onroad/running costs and some principal payments would be covered pre-tax?
Keen to get your personal experiences, tips and recommendations.

Cheers!

Automotive Novated Lease

Comments

  • Drpepper666 on 14/01/2024 - 14:53

    Your income is decent. Nice! Spend it all on a Lexus why not

  • ankor on 14/01/2024 - 15:14

    Ever considered a mazda cx-5? You can see the 2018 g20/25 touring with under 80k odo for about $30k. You can try and haggle them down as well. Its a pretty thirsty vehicle in the 2.5L engine variant but you’re only driving 8-10k p.a.

    https://youtu.be/kYhxevjBuMg?si=5gkgQM81CIJuilyZ

    • Jaspa7 on 14/01/2024 - 21:07

      CX-5 is not thirsty? we're averaging 7.3l/100km

      • ankor on 14/01/2024 - 23:36

        Oh, that is better than I expected. That makes it a better choice for the OP imo.

  • gryphn on 14/01/2024 - 17:02
    +4

    Our household income is more than OPs . No kids, and very happy with a 5yr old Subaru and 5yr old VW. 100k car financed would make me uncomfortable, cash only.

  • Jaspa7 on 14/01/2024 - 21:12

    if you have to drop 70+k on a car and you're doing so little kms per year.. why not EV?
    FBT, rebates, solar fuel..

  • May4th on 14/01/2024 - 21:21
    +1

    by the way that interest rate is ridiculously high, I just got a quote with orix and their rate is 6.7%. very tempted to package a ~50k ev/phev - even if you churn within 12 months I calculated it to be cost neutral (ie. at worst you pay nothing to drive a car for 12 months after you sell)

    • UltimateAI on 14/01/2024 - 23:02
      +1

      Yep, agree I had two quotes last week, bother were in the 6.x % mark.
      Higher income than OP, own home, savings and investments, but no way can I justify a 80k car.

      Associate or Novated Leasing an EV is the way to go due to avoiding the GST and FBT, but you have the commitment.

      I am not proceeding, but if I did, would likely just draw down from an offset account associated with an investment loan, as that loan is tax deductible.
      I know I will be paying GST, but at the same time interest rate will be lower, no lease management charges (they also hit you somewhere). Depending on your lease provider can be pain for budget conscious people who like to source your own Tyres ect.. Car ownership is clear-cut.

  • UltimateAI on 14/01/2024 - 22:44
    +1

    Purchasing a depreciating asset is a terrible plan for someone in your position.
    If you absolutely must then use an "Affiliate lease" or if not supported settle for a "Novated" lease, don't accept a finance rate above 6.x% (don't feel you have to accept their first offer)

    This way you can keep as much money as possible in your offset account, servicing your home loan. If you don't have a home loan (investment or otherwise), really should see if you can walk away.

    Why did your financial advisor not recommend an EV or Plug-In-Hybrid? With the Hybrid you have chosen you will be paying FBT, that could be costing you an extra $8,000 per year.

    Earning $163K you can afford a financial advisor and not post questions to public forums.

  • CuteWittleCorgi on 15/01/2024 - 08:46
    +3

    Petrol car on novated lease? No.

  • ankor on 15/01/2024 - 09:30

    @jaesoonee - where do you live currently? What does your wife do? Why are you both spending so much on novated leases? It seems that you are spending far in excess of your budget and further trapping yourself in debt.

    This does not make sense unless: -

    1. You have no rent payments to make (e.g. live in the parents’ granny flat or on a lower level of a house they own)
    2. The wife is on a 250k p.a or higher role.
    3. You have a large inheritance that you are banking on
    4. There are wealthy relatives who subsidise your living expenses with large gifts and many red enveloped etc

    What makes the lexus such a ‘need’???

    Why can’t you stay with the audi a3?

    The ozbargain mentality is basically, “camry until you absolutely can’t”. So I’m just trying to understand where you are coming from and why the lexus is required, for a family vehicle that does effectively 8-10k per annum on the odo.

  • pizzip on 15/01/2024 - 14:52
    +1

    how could anyone think it's a good idea to spend over 50% of their annual income on a car?

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