Novated Lease.

[Guest SimonF]

Hi,

I have leased an XR6T Ute to replace a VT wagon. I have had the wagon over a term of 3 years and 90,000kms. I have taken the same term on the Ute.

I am in NZ and as I understand it, a vehicle deemed to be 'commercial' - a ute, van or wagon is exempt from FBT as long as it is signwritten. So the compromise for me is that I have to signwrite the Ute and put a canopy on it. I don't mind doing either of these things as I am going to have an awesome 'work' vehicle.

The difference in lease dollars on the Ute compared to say a VX wagon or even a BA Futura wagon was not a lot. My employer is happy that I am happy and in turn the new lease hasn't cost them much more than what they were going to pay anyway ( for another wagon etc). They claim back a proportion of the lease payment , GST over the term etc. The lease is for a fully maintained vehicle so there are no other costs to us apart from fuel. We are not 'leasing to buy' however, so the vehicle is handed back in 3 years - we will incurr minor costs at this time to remedy any minor panel work etc deemed to be other than normal wear and tear.

I did get some quotes from 'Ford Leasing' but they were not competitive and worked on residual value of the vehicle at the end of the lease - which is not how my current lease is structured.

It's due on the 17th of April.........

[Guest Isher]

Don't forget too that with a Novated lease you will save the GST of the purchase price of the car. Eg, if we have a $46K car the finance company gets a GST rebate on the purchase of the car. They should pass this rebate onto you in the form of reduicing the amount of finacne you need for the lease, eg $46K - 10% = $41400 (not entierly accurate but good enough for here..).

Check around as I got quotes from several companies on novated lease finance and only a few of them stated that you got the GST back on the purchase of the car. Keep the ba#@ards honest!

Regards,

Isher

[bdennis]

Guys,

I have anovated lease. I do 40,000km a year plus. I have used Novalease for my old AUII XR6 and my new XR6T. They are great... I would recomend them for sure..!

[Guest Craig]

I will be leasing my Car through SMB Fleet Management (our Departments provider for Novated Leases).

As I explained to my wife – we pay everything with gross dollars as it is taken off my income (benefit of tax reduction).

So instead of having to earn $2 for a litre of fuel we now pay only $1 (to earn $1 net I need to earn $2 gross is the logic). It took a while for this to sink in but for anyone earning over $75k it is the way to go as the deduction for the lease is at the maximum taxation advantage.

Also if you sell the car at the end of the lease for a value over the residual this money is all tax exempt so it is a profit in a sense.

Craig

[Djelibeybi]

I went with Prosperion for my novated lease, and they've been great, even after I was made redundant and lost the novation. I'm now re-novating the lease with my new company.

Along all the advice in the thread, my advice is to get all modifications added to the orginal invoice, as this is what is novated. Once you've got the car, its far more difficult to get any modifications made, as the lease companies usually don't want the value of the car to change significantly (either up or down).

I even got my custom rego plates added to my original invoice, and thus the lease.

[Cro]

I went with Prosperion as well, they have top service (my dealer thinks otherwise though), and have helped me out heaps.

I am going to be doing about $30,000 a year, will have to re-budget with these current petrol prices though

[mercturbo]

I'm with Custom Fleet and could order what I wanted (any options), Nov Lease. They are ok. Something to consider though is that a lot of people I know are doing a 12month lease (25000k's) myself included, its a fair whack off your gross wage, around $25k, but with a residual of 65% plus gst of your fleet or discount price, if the resale value is good in 12months, then you could come out of it quite well, the maths works out ok for me but you need to do your own, but I think you should earn at least $75k and do at least 25'000k's for it to work out ok.

[Guest Brent400]

depends on what you are going to use the car for, Business, private etc. Best person to speak to is your accountant.

[whatever]

just a question, if you have the full amount in cash would it be better to paid cash or do novated lease?

My view was that (I am just assuming here)

paid cash - you would have already paid tax on it therefore it would cost you alot in pre-tax dollar. $50,000 car and at 48.5% tax rate. the car is cost you close to $100,000. but you save on the interest payment.

novated lease - you paid everything with pre-tax dollar so you save on tax, but you have to pay interest. using the novalease calculator - payment is @25000 a year so the car is cost you pre-tax $75000 in total.

I have asked my accountant about it, he always told me if you have the cash, buy it with cash. but my research it looks like novated lease is a better deal. does anyone else can offer their view on this.

[richdave]

Your rationale seems sound and your accountans advice suprises me....but then I'm no accountant. $75K pre tax over 3 years = about $39k post tax. It really depends on if the car is a "perk" or used for business. IMO If it's a perk then you are better of novating since you get tax benefits, where as if you buy the car you cannot write off any of the costs or depreciation to offset PAYE tax. Remember it will cost you about $3500pa to run the car post tax (based on 25k pa)

Remember too that your $50K car will be worth about $24k at 22% depreciation (max ATO rate IIRC) over 3 years so you have LOST $26K which was paid POST tax.

Also remember if you buy the car you pay GST on it and the running costs, if you novate the car is at least 10% cheaper and all running costs are GST free on top of the fact it is all paid out of pre tax dollars.

I'll try and do a few calcs and see the effect of deprectaiting the car and claiming 80% as business use for a comparison.

Check out this thread too

Finance, Loans vs leases and novated leases

Edited 25/01/04 08:37 AM by richdave