Novated Lease Vs Buying Outright

npnp on 24/01/2025 - 16:33
Last edited 24/01/2025 - 21:17 by 1 other user

Background:
40,000 km per year driving, looking to get an EV, mortgage with offset, another potential mortgage loan next year

Scenario 1: 2 Year Novated lease for new EV (i.e. 2024 Model Y for 58K)
Pros - FBT, pre-tax pay, opportunity cost/ offset saving
Cons - Ridiculously inflated ongoing costs/ insurance, balloon payment (which itself would be close to scenario 2 below), drastically reduced chance for a second mortgage

Scenario 2: Buy a used EV (i.e. 2022 Model Y for 40K) outright
Pros - Less ongoing costs, can utilise in-house solar or night time less rate electricity
Cons - Offset savings gone (around 6K over two years)

From my brief calculation, if my income were 250K, scenario 1 would have made more sense, if it's 100K or less, scenario 2 would have made more sense.

Presuming my income is 150K, what would you do and why?
Thanks in advance

Poll Options

  • 73
    Scenario 1 makes more sense
  • 28
    Scenario 2 makes more sense
  • 96
    Don't buy an EV
  • 23
    Buy a hybrid, cheaper overall
  • 13
    ICE car still makes more sense
Automotive Car Electric Vehicle Novated Lease SUV Tesla Inc

Comments

      • tasty-falafel on 28/01/2025 - 19:24
        +1

        Doesn't mean much, Netanyahu has always had his self interest at heart, and not the Israeli people. He's also a fraudster that is repeatedly trying to delay his criminal trial due to political events which shows his level of integrity.

        I guess the question is, if Elon wasn't doing that salute, why wouldn't he apologise? Also, why would he choose to support the extremist far-right AFD party in Germany which is openly antisemitic, openly denounced by the ADL, and the closest thing to the Nazi party in Germany? With context his actions seem very suspicious.

        • npnp on 28/01/2025 - 21:12

          I always believed businessmen especially those at Elon Musk's level (or even those alike Trump) are not really racists in their minds/hearts but do certain things to 'stimulate' a certain crowd (often the majority) to gain their business and political agendas… Perhaps that's what Elon did. He realises (with Trump's win) that the majority of Americans represent sort of 'far right' ideologies and thus he was just using the gestures that are mostly appealing to those. Just providing what the crowd wants and gain from it like a true businessman. In his heart / mind, there's nothing more to it (as he's smart enough to know racism is stupid). But he's also smart enough to know that there's enough dump people around so you can use sort of stupid s**t to your own advantage.

          • Frosty17 on 29/01/2025 - 09:55

            @npnp: Or he's just super autistic and does weird sh** in public. Or he's a racist nazi supporter. Or the above. It's annoying because he's so vocal, so it makes it easy for people to hate on Tesla. I am sure if CEOs of other brands spoke their minds more and were more vocal we'd say the same about XYZ brands. But no denying, it definitely makes it a bit harder to consider getting a Tesla these days. Yes, it's just a car, but you will always get comments from certain people.

            • whyisave on 06/02/2025 - 17:24

              @Frosty17:

              I am sure if CEOs of other brands spoke their minds more and were more vocal we'd say the same about XYZ brands.

              Saw this online…

              Who cares about Elon. I never bought the car to celebrate my love of him or his actions, nor will his actions change how much I love the cars.
              And what about the CEOs of all the other car companies… I’m confident they aren’t all wonderful role models, let alone the CEOs of every other company one might purchase things from with.
              People are buying cars not identities 🙄

              Here are some notable examples of CEOs of major car companies doing scandalous things…should we boycott them all!?!

              1. Carlos Ghosn (Nissan, Renault, Mitsubishi) – Financial Crimes & Escape (2018-Present)
                • Arrested in Japan for underreporting salary and embezzling company funds.
                • Escaped in a box on a private jet to Lebanon, avoiding trial.

              2. John DeLorean (DeLorean Motor Co.) – Cocaine Trafficking Sting (1982)
                • Caught trying to smuggle 27 kg of cocaine to fund his failing company.
                • Acquitted due to entrapment, but career ruined.

              3. Martin Winterkorn (Volkswagen) – Dieselgate Fraud (2015)
                • Led Volkswagen’s massive emissions fraud, cheating tests in 11 million cars.
                • Criminally charged for fraud and conspiracy; VW paid $30 billion in fines.

              4. Volkswagen Execs – Bribery & Prostitution Scandal (2000s-2010s)
                • VW executives used company funds to buy prostitutes and bribe union leaders.
                • HR boss Peter Hartz convicted; others resigned but avoided prison.

              5. Ford Pinto Scandal (1970s) – “Exploding Car” Cover-Up
                • Ford knowingly sold cars with a deadly gas tank flaw, choosing to pay for lawsuits rather than fix it.
                • Internal docs showed Ford expected 180 deaths but did nothing.

              6. James Liang (Volkswagen) – Personally Engineered Dieselgate Scam (2015-2017)
                • Designed the cheating software for Dieselgate.
                • Sentenced to 40 months in U.S. prison.

              7. Helmut Werner (Mercedes-Benz) – Prostitution & Bribery (1990s)
                • Used company money to buy prostitutes and gifts for politicians.
                • Sparked internal corruption investigations but avoided major punishment.

              8. Carlos Tavares (Peugeot & Opel) – Mass Layoffs for Profit
                • Cut thousands of jobs despite record profits while taking massive bonuses.

              9. Rick Wagoner (GM) – Bankruptcy & Bailout Greed
                • Led GM into bankruptcy, then took huge bonuses while demanding a government bailout.

              10. Bernd Pischetsrieder (Volkswagen) – Bribery & Corruption
                • Used company funds to bribe union leaders and suppress opposition.

              11. Ferdinand Piëch (Volkswagen) – Espionage & Union Manipulation
                • Spied on competitors and bribed union leaders to maintain control.

              12. Henry Ford (Ford) – Antisemitism & Union Busting
                • Published antisemitic propaganda and violently suppressed striking workers.

              13. Takata Airbag Scandal – Deadly Cover-Up
                • Sold defective airbags that killed at least 30 people and faked safety tests.

              14. Daimler (Mercedes-Benz) – Global Bribery Ring
                • Paid officials worldwide to secure contracts, fined $185 million for corruption.

              15. Edward Cole (Chevrolet) – Corvair Safety Cover-Up
                • Sold a dangerous car despite knowing its fatal handling flaws.

              16. Toyota Sudden Acceleration Scandal – Deadly Lies
                • Hid acceleration defects that led to deaths, fined $1.2 billion for deception.

              • changyang1230 on 06/02/2025 - 17:53
                +1

                @whyisave: It kind of depends on how much you think the implications are.

                Some are historical figures (Ford etc) so it’s irrelevant. I don’t change my opinion on King Charles due to what his great grandfather did.

                Some are despicable and horrendous misdemeanours but the victims are limited.

                So while there’s a bit of analogy, the magnitude and reach is on a totally different scale altogether when it comes to Musk - he literally has his tentacles all over various US departments, actively financing far right European parties, normalising Nazi salute (serious or not he deserves serious rebuke). These are a lot more serious and far reaching than CEOs who covered up a car’s defect or smuggled some cocaine.

                There’s also the issue of whether any boycott will serve to penalise Musk or curb his power. The answer is I don’t know, and to be fair his Tesla share (I think 13%) only makes up some 100 billion of his 500 billion net worth. However a lot of people are refusing to continue to finance a megalomaniac who has very tangible chance of bringing back fascism into mainstream in our increasingly chaotic world.

                • whyisave on 06/02/2025 - 19:25

                  @changyang1230:

                  It kind of depends on how much you think the implications are.

                  I don't react the way, all the Musk fanbois did/do.

                  I don't really care about Musk or even his appearances, in the news cycle.

                  Musk has his involvement in many military projects and he is playing a role, for different purposes.

                  I was just adding some 'information' that I found online, about other CEOs as well.
                  I use OzB as some kind of bookmarking feature, knowing where to turn to, if I need to find the information again, haha.

                  We are just living in a hyper-connected, and information-overload era, so this is a real test for everyone's "blind spot" in their intelligence.

  • tomlikesbeetroot on 29/01/2025 - 12:34

    Personally I went the novated lease and was able to take out a second mortgage within the same year. It is basically treated as any other personal loan.
    Running costs are not really inflated for me, but this can vary between lease providers, my interest rate under the lease was as good as it would be if I approached a lender directly. I was able to obtain my own insurance, rego is what it is for any car. The only additional costs for the lease are the admin fees.

  • ratoloko on 30/01/2025 - 17:55
    +1

    Buying an EV in 2025 knowing that infrastructure is just not there is the easiest way for you to burn money.
    Not to mention Tesla practices which makes your car a never ending lease, you never truly owns it.

    Remember, not everybody follows battery mandatory care, even tho the car says the battery is okay, it does not show neglected batteries that are okay at that moment just waiting to give you a nice news.

    I am not a hater, I almost bought a Polestar 2 some years ago.
    Do me a favor, pick a weekend and stay at Tesla charging network watching the carnage you are about to get into.

    Hybrids aren't perfect either, they do go hard on the engine meaning that hybrid cars are suffering engine failure more often than the same ICE model.

    Because of all this drama and because I didn't wanna get into the second hand market to try my luck, is that I got a 2024 Suzuki Jimny Manual 4 Doors for 40k in NSW.
    It is fun to drive, takes you from point A to B, 4WD with folks doing wild/awesome trips without carrying a LandCruiser price tag and problems which in case you don't know, the new LandCruiser in Australia are just full or problems.

    Whatever you do, never finance the car, take the loan and then buy the car in full.
    Paying in full allows you to negotiate the price, and in case you feel like you made a terrible mistake like buying an EV in 2025, you can just sell it. You won't sell a financed car that easy or find people willing to take it.

    • npnp on 30/01/2025 - 18:38
      +1

      I appreciate your advice mate, though I do not share the same opinion or agree with everything you said, you do have some valid points. Yes, I had seen EVs lined up for charging points (potential hours LOL) and personally experienced that when I was in NZ driving a rented EV (which was a mistake on my part LOL). A couple of times I would reach to an EV charging point after driving a couple of hundred km and would find myself in a queue of a few other EVs in front of me each requiring at least 1 hr of charge.. That was beyond ridiculous. I almost missed my flight and missed out on a few things (as my travel plan was tight which obviously hadn't allowed for wasting time on charging points on the road LOL).

      Having said that, driving the EV itself (it was a Kia Niro or something like that) was quite nice and I enjoyed that. But was that worth the range anxiety or hours of waiting? Probably not. Also, the range shown on the dashboard is absolutely rubbish. After fully charged it would show 400 km, after driving 20 km of road, the available range would be shown as 300 km, after another 20 km it'll drop down to 200 km LOL. When I start I'd expect at least 300 km out of the estimated range of 400 km, but NO you will NOT get that. Depending on the route, and terrain, it's more like 200 km at the end. I had to switch off the AC etc at the end to ensure I reached the destination (only to find out another EV was hooked to it already.. Ah well.. Lot of swearing and carrying on, I swore to myself never to buy one, after just two years, here I am, looking for one.. LOL) Because I can charge it overnight at home at very low rates, and driving on almost flat terrain in WA won't fluctuate EV range so much so hopefully it won't give me range anxiety attacks…

      I'm unable to agree with your comments about Hybrid lengevity. I've been using hybrids pretty much all my life (had at least 4 of them from 2nd gen Prius, Prius C, 3rd Gen prius, Corrolla Hybrid and now Corolla Cross hybrid). ICE engine components of hybrids are used less (not more as you've suggested) thus they last a lot longer. When I sold both my 2nd gen and 3rd gen prius cars, they both had over 200,000 km on the clock and still ran perfectly fine. Engine wear and tear was absolutely minimum (you could tell by engine oil changes - note that it's 15,000 km oil changes still oil looked not bad). For example, normal ICE corolla has 1.8 L engine and corolla hybrid also has 1.8 L engine. Hybrid has got electric back up which means engine doesn't get used roughly 20% of the time. Therefore in very general terms, you could expect Hybrid ICE components to last at least 20% more than regular corolla ICE. I have seen Prius cars with over 1 million km (with 3 hybrid battery changes but still on original engine) so I know they do last.

      • ratoloko on 31/01/2025 - 14:07
        -2

        I will need to do some more research then because both hybrid and even worse, that stop-start engine feature goes hard into the engine.

        Regarding EV, here is not Europe where there are chargers everywhere so EVs are smaller with smaller battery and that is fine. Small battery equals to charge faster.

        Australia and the US is pure carnage regarding EV, infrastructure does not exist so cars have to have bigger batteries so the EVs are heavier which affects the range which takes longer to charge, repeat!!
        You cannot carry your home with your own charging setup, no many people have houses but buildings so no EV setup.

        See the problem??
        Again, I am not a hater, the technology is not there yet.

        I am not even getting into maintenance. It is true, no oil change, not this, not that but boy oh boy, Tesla brake system cost a popular second hand car, anything cost a kidney.
        Wham Bam Teslacam from time to time shows accidents with price, yo, simple things cost like USD10k for no damage at all. WT….
        Imagine all the parts being sold here in Australia with the US dollar now getting stronger with Trump??

        Anyway, 40k or even worse 60k is money. Please, don't waste it to buy hype technology that aren't mature enough in Australia.

        • changyang1230 on 31/01/2025 - 14:50
          +2

          Not really sure why of all things you chose "Tesla brake system" as an example. If anything, the lack of brake pad wear is precisely the selling point of EV due to their one-pedal driving. Examples exist of Teslas that have gone 400-600,000 km still on their first set of brake pads.

          Anyway while I agree that the infrastructure is still not 100% mature for those who do a lot of regional driving, for a majority of people these are not a deal-breaker in the context of other advantages. I love my EV for my day to day drive and the financial advantage of novated lease made it a no-brainer upgrade for me personally (yes everyone's mileage varies depending on their personal situation so crunch your own number). I have done 3x long distance road trips to regional WA (Exmouth, Kalbarri and Esperance respectively) with no major drama. Yes it still involves a bit of planning and vigilance but the small inconvenience pales in the positive experience I experience on the other 51 weeks of the year.

          I do concur that people who do a lot more regional driving may find the inconvenience and stress a major deal breaker and that's totally fair. People who want to do a lot of towing for significant distance may be inconvenient too. Same for people without charging infrastructure at home. However, if you don't belong to these categories, the one week of drawback vs 51 weeks of improvement favour EV, as the increasing number of EV owners would overwhelmingly tell you.

          • ratoloko on 31/01/2025 - 15:49
            -3

            @changyang1230:

            Not really sure why of all things you chose "Tesla brake system" as an example. If anything, the lack of brake pad wear is precisely the selling point of EV due to their one-pedal driving.

            Bingo, exactly!!!!

            People are not using the break to depend on the electric motor to do so.
            We don't need to be Einstein to understand what happens with anything that was designed to move but does not, it jams.
            People are having to replace the entire brake system because everything got jammed because of the dependency on one-pedal driving.

            Now, go check how much does it cost to replace a Tesla entire brake system :)

            • changyang1230 on 31/01/2025 - 18:35

              @ratoloko: If you are going to claim some sort of increased motor failure rate from regen braking without real life statistics to back up your claim I have no motivation to reply further. Enjoy your weekend.

              (You do realise that there is no actual friction and physical contact happening when electric motor is used to slow the vehicle? Read up on it.)

              • ratoloko on 31/01/2025 - 20:03

                @changyang1230: Google it for yourself, I am not here to change your opinion :)

                • changyang1230 on 31/01/2025 - 20:31

                  @ratoloko: Neither am I - just putting the facts on the table while I continue to enjoy my near-zero maintenance cost of my EV while not worrying about miniscule chances of motor failure of modern EVs.

                • npnp on 01/02/2025 - 10:35

                  @ratoloko: Though definitely not a Tesla fan, I also agree with Changyang1230 here. My Prius hybrid when I sold at 240,000 km still had the original set of brake pads (they don't get usual wear and tear due to regen braking). I can only presume this is even better in EVs. All I ever serviced in that car were oil, filter, tyres and wipers. I can only presume this is even better in EVs as oil & filter aren't needed.

                  Having said that, I'm not entirely eliminating electrical and electronic failures in EVs.

                  For example, one of the biggest reliability issues in German cars is their electrical/ electronic components. If the EV car maker isn't as 'serious' in quality control as say for example 'Toyota', then they will be prone to same issues as German cars (I don't have to explain Ozbargainers how unreliable they can be especially above 100k mileage, there had been too many posts on those s**t boxes lately). If Tesla for example, are as serious as 'Toyota' in maintaining their QA QC (which I still don't think is the case) then there won't be an issue.

                  What I'm trying to say is this. Contrary to popular belief of 'battery failure', I bet most of the issues in EVs will come as 'electrical component' failures over age.

                  That's one of the reasons why I'd love Toyota to introduce an EV to the table. If they can do an offering with a decent range at Tesla prices, then I will buy it in a heart beat. Unfortunately they're not there yet.

                  • changyang1230 on 01/02/2025 - 11:10

                    @npnp: Yeah electric motor failure and electronic failure do exist, this is true of every human-made product.

                    I was mostly rebutting @ratoloko's unfounded first-principle guess of "the motor is used to slow an EV" > "it must wear and break faster than traditional engine". They then make some vague description of "expensive Tesla braking system" related to their motor failure - is it the brake or the motor that this is supposed to break? Their argument relies on sweeping claims without providing the necessary specifics and instead resorts to vague, alarmist language.

                    The early Tesla Model S did suffer from premature drive unit failures, but the subsequent generations have since maintained excellent durability and reliability. The current cars on offer in Australia, 3 and Y have all been remarkably reliable and reports of early catastrophic failure are very rare compared to reports of people having zero trouble after having done 200, 300, 400 thousand kms. Even in those premature Model S failures, there is zero reports of regenerative braking being identified as the reason of its failure.

                    I am still interested in their producing evidence of current generation EV's supposed outrageously high premature failure rate from "mechanical wear" of regenerative braking. I have attempted to google as per their suggestion and have not found anything that matches this allegation.

                    • bghunter on 01/02/2025 - 22:37
                      +1

                      @changyang1230: Cant trust someone that doesnt know the difference between 'break' and 'brake'

                      • ratoloko on 03/02/2025 - 19:36

                        @bghunter: Said Albert Einstein who never made the biggest mistake: Typo
                        It must be awesome to hang out with you……. not!!!! haha

          • Frosty17 on 07/02/2025 - 17:35
            +1

            @changyang1230: IF you cannot charge at home, then I would personally never consider an EV. The cost of some chargers are not far of refuelling, and the queues can be a nightmare. Tesla Supercharger infrastructure is great, but now that they are opening to other brands means more potential waiting queues if you have a Tesla. IF you do very long range driving, or lots of regional trips, then I would also not consider an EV.
            However, if you can charge at home (and fast charge even better), don't drive very long distances (especially on a route that doesn't have a solid charging infrastructure like regionally etc.), then an EV is a great choice if you like the car, and even better if you can get a good novated lease on a higher tax bracket.

            Edit: I agree with all your posts btw :)

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