Novated lease

jongaz

Hi

Just would like to know if anyone has experience in getting novated lease when buying a car in oz?

Pros/cons practically? Interest rates?

I'll be living there at least 3 years.

Advice/experience on duration to get novated lease would be great too!

Thanks in advance

mandrake04

jongaz wrote: »

Hi

Just would like to know if anyone has experience in getting novated lease when buying a car in oz?

Pros/cons practically? Interest rates?

I'll be living there at least 3 years.

Advice/experience on duration to get novated lease would be great too!

Thanks in advance

I have done it.

Its usually a 3 way arrangement with you, lease/finance company and your employer who pays the payments for you pretax. Many employers use it in Lieu of a company car as the employee leaves the obligations leave with them. You can get a fully maintained or fully maintained/fuel estimated on you annual KM. Main benefit is it saves the employee GST etc, downside is if you leave before the contract is up you either need a new employer to take it over or pay it out the remainder of the contract.

The other way is to buy a car yourself and log book it for 3 months I have done this twice, this will do you for 5 years. If you can logbook say 90% for business use then you dont pay any tax on that 90% and you only pay tax on the remainder at your marginal rate of tax.

ie. if you allowance is $18K per year that's $1500 per month

90% Business $1350 TAX FREE
10% Private $150 at say 37% is $55 pm

So on the $1500 you only pay $50 in tax.

I do the above plus the employer gives me a fuel card, anything over the $18K and you can still use it as deduction during your tax return.


At the moment the likes of Nissan are offering 1% over 3 years for May/June other dealers like Toyota sometimes offer similar (usually around this time of year) other than that most Chattel Mortgages are around 4%.

If you are not a permanent resident and on a visa you might get shafted on finance and leases.

If you want to be totally obligation free a company car is the best option, but then you have to drive what they give you.

woolymammoth

mandrake04 wrote: »

I have done it.

1) do you already work in finance to understand this bull****, and
2) is it really worth the effort?

I looked at it a couple of years back, and tbh it made my head spin. I came to the conclusion i'd have to be driving maybe 3 or 4 times as much as i did to get any financial benefit for that headache.. also, the fact the company only used Maxxia may not have helped!

jongaz

looks like there is a lot of things to do/going on.

I obviously still don't understand it..

Do they use no claims bonus stuff like ireland? How is the insurance cost like in oz?

mandrake04

woolymammoth wrote: »

1) do you already work in finance to understand this bull****, and
2) is it really worth the effort?

I looked at it a couple of years back, and tbh it made my head spin. I came to the conclusion i'd have to be driving maybe 3 or 4 times as much as i did to get any financial benefit for that headache.. also, the fact the company only used Maxxia may not have helped!

Nope I don't work in finance but it's not hard to understand.

Novated lease is usually used instead of an actual company car, the employer pays the costs of the employees car instead.

Or

The employer can pay the employee a $$figure car allowance and its up to the employee to use it as they see fit. They have to show it as a deduction otherwise they will be taxed on it.

It wouldn't matter how many KM you do per year, as long as for that 3 month period you do the log book the majority is business it will work in your favour.

mandrake04

jongaz wrote: »

looks like there is a lot of things to do/going on.

I obviously still don't understand it..

Do they use no claims bonus stuff like ireland? How is the insurance cost like in oz?

You should ask your employer to explain about the Novated lease as that would help.

similar no claims bonus for insurance as for Ireland.

Comphensive Insurance is not bad, $1200 for 2015 Jeep Grand Cheokee Overland 3.0L V6 for 37 year old male.

jongaz

mandrake04 wrote: »

You should ask your employer to explain about the Novated lease as that would help.

similar no claims bonus for insurance as for Ireland.

Comphensive Insurance is not bad, $1200 for 2015 Jeep Grand Cheokee Overland 3.0L V6 for 37 year old male.

Thanks for all the reply and the info.

By no means was I trying to offend your reply. My head just doesn't work fast that way...:(

Is the process long and tedious? or would it be just couple of days to maximum a week?

mandrake04

jongaz wrote: »

Thanks for all the reply and the info.

By no means was I trying to offend your reply. My head just doesn't work fast that way...:(

Is the process long and tedious? or would it be just couple of days to maximum a week?

No that's ok no offence noted. It not hard process just a bit paperwork which is the same with buying a car anyway.

The main advantage to a company car/Novated lease is you have use of a car and someone else pays the costs.

A car allowance is no different just a different way of doing it.

If you were to get an $18K a year allowance over 4 years that's $72K, that will allow you a decent enough car/finance interest/maintenance. Especially if the employer is paying for the fuel.

If you didn't get an company car/Novated lease or a car allowance and wanted a car then you would probably pay and run it out of your taxed income.