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

    • 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

      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…

  • 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.

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