I have been considering getting an EV on a novated lease through Maxxia for 5 years.
We are looking at the Tesla Model 3 , maybe the base one.
My salary is 120K and the estimated out of pocket repayments fortnightly is $580.
I enquired about the interest rates and it is 14%.
Is this a normal thing ? this seems really high for me
Has anyone done a loan from a different bank as I think this is possible?,
thanks
I just checked. It's 6 million. Stop exaggerating please.
If I have told you once, I've told you a million times, stop exaggerating.
Yes it's normal with these lease companies. They seem to think they're entitled to a large chunk of your tax savings and pray on people who don't source their own financing/insurance etc.
Thanks, can you recommend any other financing company that can be used for novated leases?
Yes, but my fee for doing so is ~75% of what you'll save.
You need to ask your payroll/HR as to which leasing company they will work with. In general, it's locked to the one your employer has chosen.
If you can choose, shop around. Get lots of quotes for car only (no insurance, maintenance, fuel, etc.) so you can make a like-for-like comparison. If your company is in bed with Maxxia then you may be SoL, but I'd still complain to my employer.
14% is ridiculous, let alone on a five year lease.
Numbers wouldn't really calc on a $120k income.
there's this amazing thing called a search function…
$120k income shouldn't be leasing a $70k car imho.
And you'll find 14% is excessive but all leasing companies will be similar, it's a rort that takes taxpayer dollars and lines their pockets with them.
it's a rort that takes taxpayer dollars and lines their pockets with them.
Yep… As soon as the government announces any rebates or cash back or incentive schemes… It's amazing how the price goes up exactly the same amount as the government incentive scheme is offering…
You're not suggesting that builders might increase the price of the new home by about the same amount that the first home owner grant might be…? I'm shocked…
My recent lease was on 9.3% or something. At five years it was about 9.8% comparison rate (I back calculated it) and at 2 years it was closer to 12% comparison. I asked them directly about it but they maintained that the IR was always the 9.34% number.
I don't think it's crazy for someone earning 120k to buy a model 3… They aren't 70k anymore, more like 60k and then you get the GST savings with novated lease, so like 54k~.
I do agree that the high interest rates are a scam though and definitely eat into any potential savings.
the difference is that the EV is FBT exempt. Just roughly this would equate to them leasing a 40k petrol cost after "savings". Yes the leasing company is taking the piss and absorbing most of the savings but it's still a mile ahead of buying a used car outright or leasing a new petrol car. All your expenses and lease payments are pretax. That said 14% is very high and we recently got around 9% with with another provider. Your best bet would be to push for your own financing but not all will allow it.
Unless you can offset that interest in other means, ie convenience, suitability, etc anything approaching or over the 10% GST saving is very hard to take on board!
Have you spoken to a financial advisor? A 5Y lease is ultimately very expensive.
I will contact a financial advisor next week. Thanks for the advice
Would you pay an interest of 14%? Pre-tax or not?
Actually, if what you are saying is correct,
$580 x 26 fortnights x 5 years = $75,400 against a car that is worth $67,421 (Base 3). A premium of 12% OVER 5 YEARS (Appx 2.5% per year implicit interest).
Doesn't sound bad if you ask me especially if it is FBT free.
Of course, I don't believe it because I am with Maxxia too and my implicit interest rate is > 20% the last time I checked.
NB: OP didn't mention balloon so that adds to my suspicion.
The balloon is $19475
but don't forget that payment also includes insurance, rego, servicing (yes you are meant to service an EV!), tyres etc). You will be ahead.
dont forget to include cost of EV-themed personal plates
Best to do the lease 1 year at a time.
First year you'll need to pay more due to depreciation, however if your circumstances change it allows greater flexibility as you are not committed for 5 years.
If you break these leases you need to pay the full amount of interest for the entire term.
Also the interest rate will likely drop over the next few years.
My salary is 120K and the estimated out of pocket repayments fortnightly is $580.
I enquired about the interest rates and it is 14%.
Is that $580 just car repayments? What is the balloon repayment? What is the insurance/costs looking like? What monthly/annual fees do they charge you (I have $360 a year on top of everything else just as processing fees).
My EV novated lease made sense when I didn't have a car and had to buy one, it was 9% interest and I'm on a higher salary (and I bought the much cheaper Atto 3 and got a $3k rebate), and even then it came down to a lot of fuel savings to really make the difference (I charge at home/work for free). I really doubt it makes sense for you. Also remember to take into account that stage 3 tax cuts are coming, although that's only 2.5%.
thanks for the advice
The residual is $19475.
The admin fees are $180 a year. The $580 includes all the running cost.
So $95,775 (incl 5 yr x $180 admin fees and balloon) on a $67,421 car mean 42% premium over 5 years (Appx 8% per annum pre tax)
Almost the same as getting RACV green loan after tax but of course, excluding rego etc etc.
Not good but not bad. Others can opine probably?
Don't worry about the interest rate. These are what need to care about:
580 fortnightly seems high for a M3 for a 5 yr lease unless you're talking in pretax figures. You shouldn't care about the pre-tax figures when comparing with other options. You should only care about post-tax figures because all other options are post-tax.
$580 is the estimated out of pocket every fortnight for the tesla 3 rwd. Govt job and will most likely be working in the same sector for 10 years at least
Commbank is 6.99% for my EV car loan, taken out 3 days ago.
Not sure if you're still considering this option - but in my scenario:
Locked in to Maxxia with my employer (yay govt) and they quoted some absurd prices as well because they know they can get away with it. One thing you'd want to know is they generally will tack on extra insurances you don't need into the financing which jacks up the price. They also choose not to advertise the self-managed lease product, where essentially you can arrange your own financing for the lease, thereby saving money. Essentially you find your own financier e.g. banks or other financiers, hand it to Maxxia to package up and they will administer the novated lease with your employer. Doing so let me save up to 5-8K off the total out-of-pocket costs over a 3 year term.
Ended up going with another novated leasing company who said they can prepare it before handing off to Maxxia to administer - at around a rate of 7.3% interest ($405/fortnight + $28302 residual = $60K, purchase price $60K BYD Seal). At the end of the lease, out of pocket I end up paying the same amount as the purchase price of the car. So essentially, I get 3 years of running costs saved, as well interest in the bank.
This sounds like a great way to do it, if your employer's choice of leasing provider allows it.
Curious though - how does this work in reality? Maxxia does the administration with your employer's payroll, but the actual lease is packaged by another party - who themselves are willing to use external finance? Or is the finance inhouse to the packaging company?
Can I ask who the packaging company is? Would like to investigate to see if this is a feasible route for myself.
Im in the midst of setting this up. Yes Maxxia is the middle man, doing the administration with the payroll. They will reimburse your running costs (rego, insurance etc) as you pay them, and forward the payments for the lease to the 3rd party financier. This can be a bank, or some asset financiers who allow novated leases.
Most novated leases companies actually dont finance the car, its outsourced to a panel that they work with. In my instance, I attempted to get it set up via Positive Salary Packaging who were happy to set everything up (at the cost of a broker fee), including the 3rd party finance before handing over to Maxxia.
Little roadblock is Maxxia doesnt like you using another novated leasing company to find financing, even though its essentially the same thing as finding your own finance, so theyve rejected my application at the last minute. So now Im stuck looking for finance again and will likely be going with CBA.
If only there were 8 million other ev novated lease threads that you could have looked at.