novated leases

[ca]

I couldn't find any other discussion on novated leases. Do you have an opinion on them? Worth considering?

[smac]

Definitely.

Epac salary solutions is the mob my employer uses, they have online calculators.

[Wedgie]

Yes and no depending on individual circumstances. Got one almost 5 years ago when it was definitely worth it as could get a $40k car on a $30k lease due to our company getting fleet discounts.
They eliminated that aspect of it a few years later so if we did it again we'd have to get a $40k lease one a $40k car making it not worth it.
As an aside we've found it great from a budgeting perspective as we included everything in the lease so we knew for 5 years exactly what we were paying for repairs, petrol, servicing, tyres etc with no little surprises like you sometimes get when taking a car in for a service answer finding yourself 1k out of pocket. Also made family trips to Melbourne very cheap until we decided to stay in a penthouse for the grand final!

PS Can't wait for Psybers reply.

[Booney]

Depending upon the budget or "offer" from your employer it may or may not be for you.

For me, I went with a full maintained vehicle over an allowance / lease.

[gadj1976]

I agree with Wegs.

Things to take into account

Your income
Your disposable income
the car you want to buy
how much of a balloon you want to be left with after 3, 4, 5 years

There used to be an issue with how many kms' you did from a fringe benefit tax perspective but that's been eradicated thankfully.

I'd get another car for sure.

[Booney]

I should add the vehicle I was offered as a company vehicle was of greater value than what I would have been prepared to spend on a lease vehicle*.

Its a fairly complex system for anyone not familiar with it.

*With the balloon payment at the end in mind.

[Wedgie]

The best advice would be to talk to a financial consultant. Even though we worked out if it was beneficial ourselves I know we had to get a document signed by a financial advisor still to advise we were fully aware of pros and cons as part of the process.

[Psyber]

Yes and no depending on individual circumstances. Got one almost 5 years ago when it was definitely worth it as could get a $40k car on a $30k lease due to our company getting fleet discounts.
They eliminated that aspect of it a few years later so if we did it again we'd have to get a $40k lease one a $40k car making it not worth it.
As an aside we've found it great from a budgeting perspective as we included everything in the lease so we knew for 5 years exactly what we were paying for repairs, petrol, servicing, tyres etc with no little surprises like you sometimes get when taking a car in for a service answer finding yourself 1k out of pocket. Also made family trips to Melbourne very cheap until we decided to stay in a penthouse for the grand final!

PS Can't wait for Psybers reply.

The only thing I have to say is that I prefer to be in control of the negotiations for each repair or service and tyres or parts, given the tendency for repairers to bill for "repairs" to non-existent faults, and push up prices if you don't exercise control. I expect the providers add in enough to cover the worst case scenario so you are paying the most expected rather than the least in the package.

That said, if it is tax deductible and your time is more valuable spent elsewhere it may be a reasonable way to go.
The interest rate factored in is obviously fundamental to the deal too..

As for any lease I'd advise negotiating the interest rate hard by getting several quotes first, then decide what sort of residual at the end suits you.
I have tendency to pay out cars at the fastest possible rate with the lowest residual I can achieve so I have the most flexibility in future negotiations and pay the least interest.
(That also means I can just opt to keep that car if the next deal isn't good enough.)

[Hondo]

The tax benefits from pakaging a motor vehicle go down each time the personal income tax rates go down. The tax benefits are a lot less today than they were 10 years ago simply because the tax rates are so much less since the GST came in. 10 years ago we were paying 49% tax on every dollar we earned over $50,000. Now we pay 30% up to $80,000 so the goal posts have shifted.

With the carbon tax coming in personal tax rates will drop even further.

That doesn't mean a novated lease can't still work out better for you. In my case despite my best negotiating efforts the salary packaging company was able to scrounge me an extra $2000 in value on the car we chose after they got involved. And even with the lower income tax rates there can still be tax benefits. They are just a lot less than they used to be.

So Wedgie's advice is the way to go - get some independent advice.

[Psyber]

Agreed Hondo.

When I bought my first Porsche I was paying 57 cents in the dollar and it was worth turning over cars regularly.
I tended to lease the new car at the full price and use it 100% for business, give the previous car to wife for private use for us both, and trade her car in at the highest negotiated level and take the tax free cash.
(I often went for barely second hand cars rather than new for the greater more negotiating room.)

As my income and tax rates diminished this became less attractive.