Novated Lease Used Tesla Benefits?

RobotWizard on 18/07/2024 - 15:33
Last edited 18/07/2024 - 15:58 by 1 other user

Hey everyone, I really tried searching, reading and using all these online Novated Lease calculators but I still can't get my head around it.

I have recently purchased 2021 Tesla Model 3 for $33K Cash and got me thinking if I should've just gone with Novated Lease? Do you know how much benefit or not it will have for me on $107K Per Year income before tax?

I still haven't transferred the car into my name and can probably work something out with seller still, but just seeing if it's worth the hassle?

Thank you.

Financial Car Electric Vehicle Novated Lease Tesla Inc

Comments

      • Ozbfan on 18/07/2024 - 22:25

        Oh wow, you learn something new everyday, so if I was to do a calculator online, if it says 60k on the tesla website, I would only put in 54k into the purchase price on the calculator?

        • MS Paint on 18/07/2024 - 22:36

          Pretty sure online novated lease calculators factor this in automatically. You put in the purchase price including GST but minus on road costs.

        • May4th on 19/07/2024 - 07:42

          you still have to pay for it when you take over the vehicle at the end of the lease and pay residual, unless you sell it or roll it over to a new lease

  • changyang1230 on 19/07/2024 - 00:49
    +3

    33k is good price for a 3-year-old Tesla.

    Despite the FUD out there, this 3-year-old Tesla will last you a long, long time, and you will only end up paying a low running cost plus a much lower upfront cost for the car compared to people who paid the full price (even with novated lease-related tax saving).

    You are not losing out much, if any.

    Also, if you are considering FBT-exempt novated lease, you can't do it for this particular car as FBT exemption is only given to EVs first held and used after July 2022. So if your alternative is novated lease, you have to find another used EV that actually qualifies, or a new EV.

  • decryption on 19/07/2024 - 08:26
    +1

    2021 Tesla Model 3 for $33,000 is a good price! Sucks for me as an owner wanting to flog theirs off soon. 50% depreciation in 3 years, ouch :(

  • samfisher5986 on 19/07/2024 - 10:13
    +1

    Its a huge benefit for EV's but the benefit is even bigger if you then put the money you were going to spend on your EV in your offset.

    My novated lease interest rate is 8%, my offset saving is 6%. Therefore my actual interest rate is only 2%.

    • May4th on 19/07/2024 - 11:06
      +3

      that's the main benefit of NL - you park the money in offset which gives you 6% or so AFTER tax which is equivalent to 8-12% pre-tax income depending on your marginal rate, whereas the NL lease interest cost is whatever they charge taken from pre-tax income as there's FBT exemption - in this case you are actually ahead rather than paying 2%

    • LSGH on 20/07/2024 - 15:58

      who is your financing with? I have seen 3 different quotes in QLD, and all of them were 11-12%

  • apple2016 on 19/07/2024 - 11:59
    +1

    Do you know how much benefit or not it will have for me on $107K Per Year income before tax?

    Close to zero. NL provider gets 90-95% of the benefit these days

    • changyang1230 on 19/07/2024 - 12:09

      Don't know where you are pulling the 90-95% figure.

      While I agree that NL companies are gouging as much as they can get away with, for a lot of people there is still saving to be had, especially if you are able to get a leasing company with decent "interest rate".

    • samfisher5986 on 19/07/2024 - 13:08

      That would only be true for ICE vehicles.

  • El Grande on 19/07/2024 - 12:55

    $33K is a great price. How many Kms'on the Odometer? Standard Plus Range 490km or 556km?

    I'm looking for a similar deal too. Any tips on how to get the car checked for any battery damage or other issues.

  • Mr Bear on 19/07/2024 - 13:09
    +1

    Sharing my scenario for reference:

    Location: SA
    Salary: 150k (38% bracket)
    Model: Tesla Y RWD (69.7k driveaway purchased 10/2023)
    Length of lease: 60 month
    Monthly repayment: says 58 instalments of $1294 pre-tax or 789 after-tax (not sure why only 58 instalments but since it plays in my favour I never asked)
    Inclusions: lease, maintenance, rego, contingency
    Residual cost: $19714

    So total cost: 58*789+19714 = 65476 which is better than 69.7, plus it includes about 9k worth of maintenance, rego, contingency for 5 years.

    To me it works out pretty well. I did add insurance back to it after I started the contract because I realised everything you add to the package is charged as pre-tax.

    • bemybubble on 19/07/2024 - 14:30
      +1

      Your comparison is actually more favourable than you think.

      Add the interest component to the 69.7 original price as if you had to borrow to buy and you’ll compare apples with apples

    • drprox on 19/07/2024 - 17:48

      Wow that seems seriously good. I know ppl on the top tax bracket for whom it was beneficial but more total cost = vehicle cost.
      Does that include insurance/tyres/servicing and all standard NL stuff? I guess 2 payments less doesn't hurt either haha
      Edit - ah maybe no insurance. That's a big one…

      • May4th on 19/07/2024 - 20:30

        insurance can be added, ie. come out of pre-tax income

        • drprox on 19/07/2024 - 21:15
          +1

          Well aware mate, I mean the posters example didn't include it I think hence looked a little better than it is.

  • lachhelix on 19/07/2024 - 14:29

    Nah!
    Congrats on the car

  • jar-unit on 19/07/2024 - 14:55

    It can be very situation specific but on face value, I have a novated lease but think you did the right thing. Novated lease has some draw backs as well - you have to pay the residual at the end which could be higher than the car is worth, your credit and borrowing capacity is affected for future buying purchases until novated lease period is over.

  • wimphrel on 19/07/2024 - 15:11

    With a $33K purchase price, I don't think NL is going to give much benefit, if any: Generally it works better with more expensive cars that depreciate a lot.

    It can be beneficial to NL if you plan to replace your car every few years. I know of many people who get new cars every 5 years.

    If you're not that kind of person, and you have a home loan, then you really have to compare opportunity costs over your investment life (not just when your current home loan ends -> every dollar you spend right now, has an opportunity cost impact until you retire).

    Let's say you plan to keep this car for 20 years (or until it dies), and you have a Home Loan (I presume most of us do)
    The real thing to compare is:
    1) Long term effect of immediately pulling out $33K from your investment portfolio at this point in time (Your first home can end up being part of this) & it's impact on lost opportunity cost for the rest of your investment life. (Spending $33K now on a car immediately delays the next home purchase, or next share investment, or increases interest on your current home loan & subsequent loans in your investment life - it doesn't just stop when you've paid off the house cos you're probably going to invest in something else after that -> thats where the bloody NL companies trick you, they pretend you retire when your loan ends).

    VS

    2) The effect of pulling out much smaller monthly lease repayments slowly over time from your investment portfolio, and whether you can get a higher rate of return from the ($31K - monthly repayments) to BEAT the interest on the car & the scenario from 1) (obviously also including the benefit that all the expenses of the car that can be tax deducted - probably minimal for an EV). Since the NL interest rate (usually hidden) is much higher than home loans (e.g. ~10%), you can't leave the cash in your offset account (~6%) and you'll have to gamble as sane investment ROI over long terms is probably only about ~8-9%pa (e.g. super), but there are ways to get higher than 10% returns, I'm not an expert in that: e.g. People running businesses can probably spend $20K into their business and get more returns back, crypto, nvidia etc….

    With my own calculations in Excel & on my salary bracket with a standard ROI of 7-8% on the money I didn't spend up front purchasing outright, the two ended up criss-crossing in about 7-8 years such that it made no real significant difference (2-3K). I probably would've wanted a different car by then anyway :D

  • drprox on 19/07/2024 - 15:21

    As someone about to purchase under a novated lease yeah the maths works on these. That said the benefit decreases for smaller wages and cheaper vehicles. I wouldn't sweat it mate

  • drprox on 19/07/2024 - 16:06

    A lot of people projecting here.
    If someone is going to buy a new car anyway NL is worth a look, particularly for an EV due to no FBT and generally no LCT (<$89k approx).
    You don't need to earn $200k or even drive all that much. The key variables are 1.) are you buying a new car? (Or even fairly new) And 2.) are you someone that generally changes vehicles every 5 years (or duration of the lease/also not a dealer breaker).

  • md333 on 19/07/2024 - 16:54

    I did something similar.
    For me the NL seemed to be about a 10% benefit compared to buying outright including not paying the GST.
    Could be a bit better if you have mortgage to offset with what you are not paying up front (I calculated based on putting it in a high interest saving account).
    I bought a 2nd hand EV privately, which meant no GST saving, so about the same cost NL as buying outright, or in any case close enough for me to not bother.

  • Wyn-Ryder on 20/07/2024 - 07:37
    +1

    Agree will posts above that the car wouldn't be eligible for FBT as it is older than the cut-off.

    The best way to think about the lease for EVs is that you win on a few things:
    * GST between purchase price and residual value for new cars (can be worth 4 to 7% of vehicle price)
    * Any principal payments are made pre-tax
    * Running costs such as electricity, insurance, rego and maintenance are pre-tax. Just don't use their insurance, arrange your own.
    * Money isn't locked away until the end

    You lose on a few things:
    * Uncompetitive interest rate / higher than home loan rate (although mine is 9%, so comparable to home loan considering its pre-tax)
    * Package fees
    * More admin
    * It can take a while for the lease to get set up

    Most providers let you customise the package to some extent - just take out everything you don't want

    Based on my calcs I am around $10k better off using a lease compared to cash. Tax bracket and value of the car will affect this.

  • Downvoter on 20/07/2024 - 11:36
    -2

    Model 3? Yuck. USED?! YUCK!

  • [Deactivated] on 20/07/2024 - 12:35
    -2

    No. Novated leases are shit for almost everyone and just funnel tax dollars into private lease companies that are all shitty unregulated slime balls.

    Even IF it does financially work out for you it's at the expense of everyone else. You might get 20% of the tax benefit if you're lucky whilst the leasing company takes the other 80% away from the tax pool. So next time you complain roads are deteriorated or government services are being cut know you are part of the reason for it, no matter how small.

    Novated leases and private health insurance Medicare levy in this country needs to die in a fire and is nothing but welfare for corporate donors and selfish pricks

    • May4th on 20/07/2024 - 14:31
      -1

      that's quite a bit of mental gymnastics you're doing to get from A to god knows what B is for you

    • changyang1230 on 20/07/2024 - 14:40

      While I agree with your first point that the middleman NL companies gouge as much as they can get away with, I don’t agree with your dim view of people taking advantage of NL tax incentive = my advantage at the expense of everyone else in this country.

      When the Australian parliament passed Treasury Laws Amendment (Electric Car Discount) Bill 2022, they know full well that this means reduced income tax revenue - but with this deficit being accepted as the price they pay for incentivising take-up of electric cars which still had prohibitive initial cost.

      I took this up not just because I am able to save 46,000 dollars compared to paying cash for my Tesla, I am also happy to be a small part to the transitioning of more renewable energy. Every time I soak up solar-predominant energy when I charge my car with 8c per kWh from 9am to 3pm, I know that I’m reducing my lifetime environmental impact from personal commute.

      So, no, I categorically reject your misguided opinion that my taking up the government incentive is “at the expense of everyone else”. The parliament introduced this with a clear cost and effect analysis in place, and my taking up the deal is IMO a step in achieving the right goal.

  • drfuzzy on 20/07/2024 - 15:39
    +1

    You remind me of a woman I watched walk into a mattress shop and say to the salesman that she bought the mattress now on sale for $1000 more a month ago. "What should I do?", she asked thes salesman.

    "Go home and stop shopping for mattresses. You already have one.", the salesman said.

    She said OK and walked out.

    • samfisher5986 on 22/07/2024 - 08:36

      She has a fair point though, most RRP's in shops like that are fake RRP's so that the sale discounts or "manager deals" can be bigger.

  • LSGH on 20/07/2024 - 16:02

    Yes you can still do a NL with the car but you would have to pay a combination of Pre-Tax and Post-tax dollars for your payments….unlike for all the NLs done after June 2022 for new EVs, it would be 100% Pre-tax for your lease payments, tyres, rego, insurance, servicing, electricity to charge it

  • Perthminer on 20/07/2024 - 19:44

    I am fortunately expecting a $100k bonus in September. Can I salary sacrifice a Tesla with my employer outright like I do a laptop? Would this work? Don’t need to pay unnecessary interest on a novated lease. Ev’s are FBT exempt.

    • serpserpserp on 20/07/2024 - 22:09
      +2

      I am fortunately expecting a $100k bonus in September.

      It is almost cruel that someone can get such a figure as a bonus, yet not have common sense or know how to read their own company policies.

    • changyang1230 on 20/07/2024 - 23:49

      You can try to ask if the company could get you the vehicle outright as a fringe benefit, but not in the structure of novated lease.

      Never heard of it being done this way though so not sure if it’s even a thing.

  • serpserpserp on 20/07/2024 - 22:06

    In before the ICE lovers say "eNjOy YoUr DeAd BatTeRy"

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