Novated Lease.

[Xr6tBug]

I don't get it either and I'm going to be leasing my car. My poor financial advisor probably has a little scream every time I give him a call to reconfirm that I'm doing the right thing and has to try and explain the whole thing to me again. I still don't really get it but it looks like a great deal on paper. I work for Qld Health so aparantly that was of great benefit.

Just to show the advantage of leasing, for some, I was able to get a new XR6T with a good amount of options and it will be around the same amount of burden to my buget as the repayments for my current 2001 SS. And as a bonus the lease company will cover peterol and maintenance. I had to give another lease company a call to check that I wasn't being conned because it seamed like such a great deal.

So my advise if your a bit of a financial dumb ass like myself give a financial advisor a call and get them to wright out all the figures for ya. You may be plesently supprised.

[curious]

I did mine through Statewide Salary Packaging in Brisbane, The prop. there is excellent. My purchase price was 43,900 for premium sound, manual , blueprint and some acc. An excellent price. He told me what he could get and said if could better it that's no probs, so I went into my local dealer and he almost died then rang back and said OK we will do it for that, it saves me a flight to Brisbane. Tied in wth my package is fuel, tyres, insurance, servcing etc. It is great and I use it totally private with 25,001 km a year. The only prereq. is that u are a govt. employee.

[Mondie]

Some more good info in this recent thread on leasing started by JB.

Different leases?

[sykes]

Hi,

I am looking into getting a new car and doing it via a Novated Lease.

But was just wondering about all the pro's and con's and if it will benifit me, as in dropping my taxable income etc. or if it is just better off doing it normally?

Would like to hear from anyone in the know or you guy's who currently have one.

Mick

[bugster70]

I don't have a lease on my car, and don't know TOO much about it all, but I do know that it very much depends on how high your income is and how many kms you drive each year. My understanding is that it really only becomes worthwhile if you're well and truly in the top income tax bracket (can't recall exactly where it kicks in these days, but think it's around $60K?) and do over 25,000kms a year, but I'm happy to be corrected on this.

[BA_Turbs]

I have a novated lease. Its not because public servants in my position earn over $60K either. I did it because its simple. The car was cheap (I got it for $42K when the next cheapest quote at the time, July '03, was $53K). All expenses for the car are paid for. Everything you could imagine that is an expense you incur to drive a car is covered, other than insurance excess.

As long as you make the minimum kms, I have found it ok, but it is also expensive for someone on my humble wage.

[Panda]

As long as you make the minimum kms, I have found it ok, but it is also expensive for someone on my humble wage.

There's a couple of 'if's'

If you were planning to buy a new car anyway, and

If you can do at least 25,000km per year, and

If you don't want to modify the car, and

If the Novated Lease covers all car expenses -

Then do it, it will save you heaps of money. If any of the above criteria are not met, think twice.

Personally, I love it because I am forced to do the km's (going on holidays more often, XR Club cruises etc)

Panda

BTW, it is not just for the high fliers.......this I know for sure.

[Turbofalke]

Here is some info which may be relavant , or not:

Nov Lease

I dont like them - too much risk but that's IMO, but they do have some advantages. Try looking at a CHP.

[Honest Gaza]

I realise that not all Novated Leases are the same, but here's how mine works.

1). You choose a car.

2). You tell the Lease company which type of car, how long you want to run the lease and how many Km's you will travel per year.

3). The Lease company works out annual costs which will include Finance Repayments, petrol costs, maintenance costs, insurance, rego, tyres and FBT....based on your annual Km's. There may also be a residual ( final payment ) at the end of the Lease.

4). Once you have the total annual costs, you then determine how much of this is covered by your employer. For example, let's say the annual cost is $20,000....and your employer is paying a vehicle allowance of $16,000.

5). You now have an annual personal contribution of $4,000.

This is where you can calculate the Tax Benefit. The $4,000 comes out of your "pre-tax" earnings. Therefore, the full $4,000 goes towards the vehicle. If you weren't on a Novated Lease and took this money as normal earnings, you would only get the "after-tax" dollars.....and maybe miss out on just under $2,000 that would instead go to the taxman.

Pros :

If you were already planning on getting a new vehicle for yourself, this is one way of allowing some of your "tax $$$" to help out.

Cons :

If you do a lot of Km's each year, by the time you purchase the vehicle at the end of the Lease....resale value will be low.

[Blonk]

100% tax deductable - just watch the FBT if you cannot put the K's on it.......