Novated Lease Refinance - Absurd Interest?

ComfortablyNumb on 11/02/2025 - 14:57
Last edited 11/02/2025 - 15:21 by 1 other user

Hey all, my car up for renewal, really feel like just ditching it and getting something with the sweet sole FBT exempt (Ev based) benefits instead.

The car just went out of warranty too, it's been good and reliable though.

What are thoughts on this?

A) Forget the refinance, pay it out now, sell it, then when ready get a complete FBT exempt benefit vehicle
B) Endure another year, enjoy salary sacrifice benefits / break even on tax + GST on purchases (essentially interest free loan)
C) B - but, try to negotiate the interest rate to something more reasonable (don't think they can)

Quoted info

$6334.90
Annual Lease payments

| Residual | Include GST | GST | Excluding GST |
| 2025 | $13783.78 | $1253.07 | $12530.71 |
| 2026 | $9046.29 | $822.39 | $8223.90 |

$4306.81 Principal

Lease Repayments - $6334.90
Principal paid - $4306.81 (minus GST)

Interest paid - $2028.09 (Lease repayments - principal)
Interest rate -13.94%

Worked out the interest rate with this formula excel (see whirlpool thread):
=RATE(NPER,PMT,PV,FV,TYPE)/12)

• 

  jv on 11/02/2025 - 15:03

  -1

  Interest rate -13.94%

  🤣🤣🤣

  • 

    ComfortablyNumb on 11/02/2025 - 16:06

    +2

    Yeah it's so common in novated lease land - they never tell you upfront and you have to calculate it.

    Still they'll tell you they are "extremely competitive". Such a crock!

    • 

      Iwantthebestprice on 11/02/2025 - 16:53

      +1

      Did they not tell you upfront? On my novated lease quote from SG fleet it shows 9%. Or is this a dodgy figure and there is more to it?

      • 

        ComfortablyNumb on 11/02/2025 - 18:28

        +1

        All depends, in the years I've dealt with smart salary, they never come forward with it, give you the run around and you need to work out yourself.

        They just give you the figures and "look how much you save" - and while you might - an interest free loan isn't necessarily the best use of your funds (unless the tax benefits are of significance).

• 

  Cluster on 11/02/2025 - 15:40

  +4

  I was looking at novated leasing for an EV last year, but couldn't accept the high fees and interest rate built into the package. Leasing companies are super eager to tell you how much tax you'll save, but part of that is based on pumping up the overall price of the vehicle with fees for themselves.

  • 

    Porker on 11/02/2025 - 16:09

    +1

    I'm currently looking at novated lease for EV too. There's indeed a lot of mumbo jumbo at play.

    • 

      uncompressed on 11/02/2025 - 16:59

      +3

      It's pretty straight forward. Just look at how much it affects you post tax and don't let the pre-tax numbers or "interest rates" get to you. Then work out if it's worth it?

      And then understand that anything not consumed as part of the budget, eg car washing, servicing, tyres and so forth will be paid back to you at the end of the lease with PAYG taken out.

      • 

        blaze on 11/02/2025 - 21:36

        are there any companies that do it transparently with good rates?

        • 

          uncompressed on 11/02/2025 - 21:50

          +1

          @blaze: I think they are all similar? I use Toyota Fleet Management myself.

          Don't be too caught up with the rates as I think it's meaningless. Just look at the numbers and work it out yourself. I also can't see how they can pump up the vehicle price, just source the vehicle yourself at the dealership at a price agreeable to you, and get them to pay the invoice. The lease breakdown is typically:

          Rent
          Management Fee
          Vehicle Rego
          Insurance
          Maintainence
          Fuel
          Tyres
          Roadside Assist (decline this if your new car comes with it)

• 

  ComfortablyNumb on 11/02/2025 - 16:01

  Apologies for typos / spell check, written and formatted on my phone in between breaks.

  Thinking not worth the corp greed and just get out for a better deal down the road.

• 

  AndyC1 on 11/02/2025 - 19:02

  What did your accountant say about the deal?

  • 

    dasher86 on 11/02/2025 - 20:35

    +1

    Ask OzBargain of course.