Can Anyone Share The Lowest Novated Lease Effective Interest Rate Quote They Got from Maxxia?

Lperthhunter on 03/10/2024 - 14:33
Last edited 03/10/2024 - 14:33

Can anyone share the effective interest rate they got from Maxxia in recent months? Not the nominal rate but the pre-tax effective rate based on Reddit changyang1230's super helpful NL calculator.
So my wife's employer uses Maxxia exclusively for salary packaging and there's no option to self-manage/find another financier.
Their initial quote's effective interest rate (based on ) was very high. When I asked them why it's so high compared to a competitor (major player) quote of sub 8% (for another employee/company but same lease parameters), they lowered the rate to 13%. This is for an EV, $29k finance value and $13k residual value ex GST and 3 year lease.

Financial Novated Lease

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Comments

  • Drakesy on 03/10/2024 - 14:41
    +2

    Yeah stick it out, i've heard 8-9% if you really squeeze em.

    • perthhunter on 03/10/2024 - 14:45

      Wow that'd be amazing - I'll see what I can get..

  • spackbace on 03/10/2024 - 14:43
    -2

    Ever think it's because of your own credit file/history?

    • perthhunter on 03/10/2024 - 14:44
      +4

      No because in both cases, Maxxia and competitor haven't done credit check - this is just the quote stage.
      Maxxia did say the super high rate is the standard rate for the employer.

    • changyang1230 on 03/10/2024 - 15:19
      +7

      Nah Maxxia is the culprit. They have exclusive arrangement with lots of government agencies, public hospitals etc, and they know their exclusive and monopolistic position so they jack up their "interest rate" to suck it all in.

      They even have an exclusive arrangement with one of the biggest hospitals in Victoria (Monash Health), where the hospital gets to receive sign-on kickback PLUS not provide GST tax refund, but in turn Maxxia gets to keep their much-higher-than-market interest rate.

      https://www.news.com.au/finance/work/at-work/staff-pay-up-to…

      • spackbace on 03/10/2024 - 15:31
        +3

        Oh 100% I know they're one of the worst, and love to hide the rate and instead show big flashy 'savings'

  • oscargamer on 03/10/2024 - 15:09
    -5

    Do you have to use Maxxia?

    • MS Paint on 03/10/2024 - 15:20
      +4

      So my wife's employer uses Maxxia exclusively for salary packaging and there's no option to self-manage/find another financier.

      • oscargamer on 03/10/2024 - 15:46
        +1

        Then you don't really have any leverage unfortunately.

    • JIMB0 on 03/10/2024 - 21:47
      +3

      You can pay cash and not have a lease. The tax savings are mostly gobbled up by interest and fees anyway.

      • changyang1230 on 04/10/2024 - 01:09

        Both things can be true - NL companies do make a killing from being the middleman of this tax incentive, but people can still save plenty of money (after carefully the pros and cons) even compared to paying cash.

        In my situation (which is close to being optimal where I am on top tax bracket, stable job, has a house offset, unaffected by subsidy etc): I am 46,000 dollars better off compared to paying cash over 5 years, even after 8.6% effective interest rate by the NL company.

  • wannagrababargain on 03/10/2024 - 15:59

    My feeling is that they don't make much interest profit off a $29k loan @ 8% so jack up the rates. They'll make plenty with $60k @ 8%. Kind of playing with numbers to meet a pre-determined profit margin.

    • perthhunter on 05/10/2024 - 23:49

      True.. but the competitor's quote for my friend is for the same financed amount.

  • ragrum on 03/10/2024 - 16:13
    +1

    Are you sure self-managing isn't possible? They have a very strong financial incentive to make the self-managed option hard to find or imply that it's not possible, but everything I've seen seems to indicate that it's always an option.

    • perthhunter on 06/10/2024 - 00:00

      Yes I was surprised as well but basically the employer's confirmed it.

  • Iwantthebestprice on 03/10/2024 - 17:23
    +1

    Tesla model Y 24 LR, 3 year lease, salary above $150K and I was quoted 8.16% via SG fleet.

    • oscargamer on 03/10/2024 - 19:14
      -8

      Which has absolutely no bearing on the op's situation, but thanks for your input

      My recent quote from sgfleet for $30k MG4, 30000km, 3 year, $130k for 7.62% also has zero assistance for the op

      • Iwantthebestprice on 03/10/2024 - 22:56
        +5

        Let the OP speak for himself, who are you to say it might not assist. With this info he can go back to Maxxia and attempt to negotiate, or he can look at my information and be like I can only get 8% by getting car X at salary Y. Your quote is actually very relevant to the OP because your quote was for a similar model and value. So now he has 2 points to work off. No harm in having this information at his disposal.

        • oscargamer on 04/10/2024 - 07:10
          -2

          How does it help the op?
          The op can't use sgfleet.
          The op can't cross-shop against another nv provider.
          The op can only use Maxxis.

          It's like me walking into the only store in a tiny town and haggling over the cost of a bag of potatoes, that are cheaper in another shop in another town, that I physically can't get to.

          • Iwantthebestprice on 04/10/2024 - 13:48

            @oscargamer: Well maybe then OP has come to the realisation, the same as you, that the bag of potatoes you are buying are a rip off and decides not to buy them.

            Knowledge is power in this game, and OP now has it at his disposal to decide weather to proceed or not.

            As for you, I would recommend you don’t buy the more expensive potatoes because it’s convenient.

  • ColtNoir on 04/10/2024 - 09:42

    Honestly, I've yet to find a better-priced NV than when I was SGFleet at Optus. I believe they're one of the only/few that handle both the lease and financing, so profit from both.
    2.92% (comparison 3.4%) in 2019.

    My new companies with SGFleet and they're about 8-9% on average.

    • trapper on 04/10/2024 - 11:38

      That is cheap, but also 2019 was a very different time with the RBA base rate only 1.5%

      • ColtNoir on 08/10/2024 - 20:03

        100% it was different but at the time, Optus had ‘Maxxia’ from memory as the alternative company which was at 9%.
        By comparison, most banks were still around 8-12% for a secured loan.

    • perthhunter on 06/10/2024 - 00:09

      I think you're right about SG Fleet.. that's what I've been hearing too.

  • trapper on 04/10/2024 - 11:34

    13% is still really high…

    I'm paying 7.13% via Toyota Fleet Managment

    • Aureus on 04/10/2024 - 18:31

      That seems really low. Did you get it a while ago when interest rates were lower? SG Fleet is quoting me 9.12%

      • trapper on 04/10/2024 - 18:53
        +1

        Paperwork went though this week, haven't even picked up the car yet.

        • Aureus on 04/10/2024 - 18:58

          Sweet. Thanks. Will have to give them a call next week.

          • perthhunter on 06/10/2024 - 00:05
            +1

            @Aureus: BTW I've been told it might be an apples-to-oranges comparison. The Toyota quote is for a self-managed lease where SG Fleet is still needed to handle the salary packaging and will add on a fee. Your 9.12% from SG Fleet is for a fully managed lease.

      • ColtNoir on 08/10/2024 - 20:04
        +1

        For reference, SGFleet quoted me 8.5% in Dec2021

  • CantonasKungFuKick on 04/10/2024 - 13:03
    +1

    I got 9.39% quote from SGFleet a few months back

  • dandandan on 04/10/2024 - 19:14

    So if your company doesn't have an agreement with anyone, will one of these companies do they majority of the paperwork for your company or whateve is involved?

  • perthhunter on 05/10/2024 - 23:57
    +5

    FYI an update. Maxxia shared the screenshot of their calculator. Turns out the new quote is closer to 10% (13% had GST included whereas the competitor's is ex GST) and that's the best they can do. It's still a significant saving based on @changyang1230's really useful calculator (thanks very much!) so we're going ahead with it.
    The competitor quote was useful as the initial Maxxia quote was much higher than 10%.

  • Poor Ass on 11/10/2024 - 14:55

    Maxxia and Remserv or any of the McMillian Shakespeare group works on the a down sell approach where you need to tell them what junk insurance needs to be excluded or they will leave it there

    because of brand they don't discount nothing unless you ask but if you got a choice go ahead with with someone else……. issue is government contracts makes them monopoly and sometimes if you no choice….. can I ask if she is a government worker?

    the current rate is around 7-8% max but if you are stuck with Maxxia then they can choose not to do business with you

    • perthhunter on 11/10/2024 - 15:26

      Thanks.. not gov worker - she's with a not-for-profit organisation and stuck with Maxxia. And for some reason, I found out her emplyoer won't refund the GST on the lease & running costs - yikes!
      Yea you're right about the 7-8% for the likes of SG Fleet.

      • Poor Ass on 11/10/2024 - 15:45

        You see it's actually illegal under Accc to not offer more than 1 choice so maybe bring it to their attention.

        It's called exclusive dealings
        https://www.accc.gov.au/business/competition-and-exemptions/…

        Only gov or entities approved for exemption don't need to comply

        • perthhunter on 11/10/2024 - 16:25

          Interesting - the horse has bolted for us but will be useful reference in the future.. thanks!

          • Poor Ass on 11/10/2024 - 16:32

            @perthhunter: as in your signed up already?

            • perthhunter on 11/10/2024 - 16:34

              @Poor Ass: yes we've gone ahead as we had to weigh up against the MG4 deal ending 31 Oct.
              It's still a net benefit compared to keeping our existing car.

              • Poor Ass on 11/10/2024 - 16:38

                @perthhunter: well yeah if you go EV it's def worth it… welcome to the club

                now if you are getting Centrelink or family tax benefit might run into some issues

  • changyang1230 on 11/10/2024 - 15:08
    +1

    Hi there! Thanks for sharing and talking about my spreadsheet.

    Just a note that I have just made an adjustment to the formulae for the interest rate calculations, such that the "effective interest rate" may no longer be the same as what the previous versions show.

    The current spreadsheet's figure may be around 0.3% higher than previously calculated.

    Just a FYI for those who are using my spreadsheet as a "standardised" calculation.

    (Despite my best effort it is extremely hard to find standard "interest rate" definition and how it behaves in amortisation in the context of 2-month deferment AND residual value - and this is likely the reason behind the discrepancies of interest rate sometimes seen from one company to the next)

    • perthhunter on 11/10/2024 - 16:31

      Thanks the spreadsheet was indispensable!
      The ver 4.1 I used estimated 9.33% for the effective interest rate vs 10% Maxxia quoted (2 months deferral). This goes up to 9.7% if it adds 2 instead of 3 months to the Present Value parameter of the PMT function.

      BTW in comparing NL and other options to the default Keep Old Car, I assume it makes sense to add all the Year 1-5 cash flows plus the Year 5 terminal value (from the asset/liability section). Is there a reason the spreadsheet doesn't include this as a full total for ease of comparison?

      • changyang1230 on 11/10/2024 - 20:04

        What do you think is not included? I do have everything you mentioned here, they are in cashflow category and the asset/liability separately.

        Or are you suggesting that some of the figure should be moved to another category for more logical presentation?

        • perthhunter on 11/10/2024 - 22:06

          Yes, all the figures are already there.
          I meant having a bottom line summary that combines the cashflow and the asset/liability figures. This might be helpful for folks that don't come from a finance background and may not know the true comparison is the 5 years of cashflow plus the terminal value (I work in corporate finance).
          e.g. what I did here (hopefully the image can be seen in this OneDrive link):

          https://1drv.ms/i/s!AsBALhTiF_zqkpoaJ25VW2253oU1Aw?e=oAGy1X

          • changyang1230 on 11/10/2024 - 22:21

            @perthhunter: Ah cool! Yeah I can definitely do that; I probably steered away from this because

            • this calculator can also be used to compare say a loan vs cash eg Tesla’s 2.99% loan; by having NL as the main point of reference people may lose sight of the possibility of doing such comparison (though admittedly this spreadsheet was indeed written with NL as the main thing in mind).

            • people might want to be cognisant of the fact that in scenarios where you are 20k richer in asset but 20k poorer in cash flow, even though technically you are “equal” for net worth, it’s still a situation where you end up cash poor which can be significant for some. Having a single figure as “the” summary figure may prevent people from appreciating these breakdowns. (Though admittedly I do a version of this anyway on the summary statements at the top)

            Let me think about it; thanks for your suggestion for improvement ;)

            • perthhunter on 11/10/2024 - 22:49
              +1

              @changyang1230: Oh yeah - makes sense.. I do agree the summary statements are sufficient for most people.
              The spreadsheet has been really helpful for me to understand how the figures for novated leasing works - thanks again for your important work!

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