AlliF

Does anybody have any experience of novated car lease?
We are looking to get a new car and hubs company can arrange one for us which would mean we could get the car a lot quicker and afford a better one. The car we currently have we own outright but given the mileage the trade-in value is going to rapidly decline now, so taking the time to save cash might be cancelled out by the decrease.
We don't drive a huge amount (he just drives to the train station and travels to the city from there) but it would be nice to have a decent car (he is thinking ford territory - fairly newish but not brand new). Not sure if this is a good way to go or just to take out finance.

JAJ

If you're looking at a 3 year lease, for example:

Perhaps compare the cashflow of the lease payments to what it would be if you bought a new car and then sold it at the end of the term?

And then reflect that that's exactly what the lease company will be doing, and it WILL make money on the deal. Nothing wrong with it making money, but you should be able to save by effectively leasing the car to yourself.

Unless there is some very specific tax reason why this could work for you.

AlliF

Thanks JAJ.
The main tax benefit would be that the company he works for would make the payments from his pre-tax salary. And i believe he may be able to get some of the running/maintenance expenses back too but will have to look into that further....

paddyo

But short journeys just to and fro the station may not make it viable for tax relief purposes. Its best when you use it continuously and rack up the miles to gain the best relief. Ask hubby's company to provide examples of relief gained v km's per year.

Beoz

From what I understand the cost of the car plus insurance, petrol, servicing, etc, etc are all paid for pre tax therefore reducing your taxable income. There is a site called smart salary where you can figure out the cost and savings. There is a fee that is paid to the novated lease company which is not huge. There is also a fringe benefit tax component. Not sure how the FBT thing works. I think it looks worthwhile considering you might be paying 7 or 8 grand over 3 years just to keep a car on the road. Apparently the govt changed the laws recently making novated leases more attractive. And with the price of cars the way they are in this country it does allow someone to get something nice without having to save a fortune or take out a bank loan.

EvannTel

Plenty of calculators on line but get a proper quote. It will depend on your marginal tax bracket and how many kms you do. Also the government have just tightened brackets making it less viable.
As JAJ says, get a quote then work out what it would cost you and compare.
For me I do a lot of kms and high tax so worth the convenience.

bingobob777

That's not the case anymore, under the recent tax changes people doing less than 15,000km a year gain the most while high mileage drivers lose the most.

FBT is a flat 20% now regardless of mileage.

ozzieeagle

If your claiming under the Nursing or medical profession benefits of salary packaging beware the car claims... As the other claims that you are entitled to are available at 30pct or higher... IE Mortgage or Rent/Meals and Entertainment/Holidays/ and Credit Card Debt.. IE: why use up your allotted allowance.... usually circa 15-18 K on a 20pct deductible item when you could be claiming 30pct or more.

Check with your fellow workmates when you get here, as to get the best out of the Salary Packaging system.... This information is for the Medical Professional and those in not for Profit organisations.

AFAIK this is the reason (20pct v 30pct or higher tax deductions) why very few if any Nurses and Medicos take the car option.

Complicated area and I stand to be corrected....

AlliF

Thanks for the responses guys. Seems like quite a complicated thing. I will check out the smart salary website and try to crunch the numbers.Need to make friends with an accountant methinks. Esp now its nearly tax rebate time too.

(Ozzieeagle, he is a civil(ish!) engineer so that info doesn't apply to us - and now we have PR, LAFHA and expense claims for living expenses etc are but a distant memory for us.)

Tonyc88

You need do enough miles to make it worthwhileas people ave said, I considered it and decided against it.

Thank god I did as i've only done 3000 km after having my car for 7 months!

renth

I reckon the service and repairs you'd get would be second rate. They probably wouldn't even bother to change the oil of a novated lease car IMO.

My boss has a novated lease car and this includes his insurance. Someone smashed a window and he rang the insurance company who assured him that there was no excess for window replacement. He went to the autoglass place who confirmed this.

When the job was done they wanted $500 excess. My boss called the insurance company and was told that there was indeed an excess to pay and accused him of making the "no excess" bit up.

Long story short he had to pay the $500 excess (the job would easily have been less than $500).

The insurance company didn't give a shit because he was a novated lease customer IMO.

There's no way I'd bother with a novated lease.

paddyo

I reckon its one of those things which are like Marmite, some like it some don't. I had a Novated Lease for 3 years when I first got here and it was good for us, good Lease company, no hassles with Insurance and had 3 claims. Servicing was excellent to be honest and if I could afford it I would use the same company to service my car now (Nissan Col Crawfords at Brookvale, NSW).

killerhales

Like PaddyO I've had nothing but good experience from 3 cars on novated leases, in my case with a company called sgfleet.

Financially, it is of slight benefit to me, but what I like particularly is the convenience and service. A P-plater recently drove into my wife's car and there was one number to call, arranged the tow truck, a hire car was available within the hour.

On the topic of insurance, you can chose the sgfleet sourced insurance or provide your own. In my case I've replaced a windscreen with sgfleet's insurer at no charge.

The idea that servicing would be done any less carefully is ill-informed. I've been able to sell our first lease car at way above the residual price (which is the price you pay to the lease company at the end of thel ease if you wish to own the car outright) because it was well and regularly serviced, and I anticipate being able to do the same with the two cars we have now.

If you have a specific car in mind, with a known price, sgfleet will provide you with a detailed quote which includes all on-the-road costs, including petrol, based on your own estimate of annual mileage.

Of course sgfleet and the finance company take a cut, but you should be ahead based on the pre-tax savings minus the FBT.

I would strongly recommend you get a quote and see what you think. A four-year lease has worked for me but you can decide what length suits you.

paddyo

SGFleet was my Lease company as well. Agree on all your points and especially about the one number, life was simple!

Amazulu

One of the few things I truly miss about the UK is the contract hire setup they have over there. I used to get a new car every year, and the last one I had was a Renault Scenic, fully loaded and top of the range which cost me GBP99 a month - fully tax deductible.

Novated lease doesn't even come close.