Car Buying Options

[poita]

Well later this year, if all goes to plan, then I will be parking a brand spanking new Opel in my driveway :)

Now I'm trying to work out financially what's going to be the best way to purchase said car.


Basically the two ways will either be


Novated Lease
Part cash deposit, residual bank loan



Just wondering here who has purchased on novated lease.
- Would you do it again?
- How much, roughly
- What are the benefits of doing it this way?

I know a few of you guys here do it that way, just wanting to figure out if it's suitable for me.

Obviously everyone's circumstances are different, but hopefully some info from those who have done it will help me out a little

[sooty]

Have had a novated lease:
Pros: you pay the same every week/fortnight so know exactly what you're up for, all your servicing and fuel etc can just be put on the card. Also save on fbt
Cons: the bulk payout at the end, having to do at least 15,000km a year

[poita]

So the bulk payout at the end, what are we talking here?

And is there a way around it :p

[JohnBu]

Is the car going to be used for any work related purposes.

If not a novated lease may be the best solution...

But they are getting less and less attractive for people not on the highest tax bracket due to the increasing FBT rates you have to pay.




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[poita]

Will be for private use only, unless I do something dodgy with my ABN :lol:

Also can you pay a certain amount upfront, thus reducing the amount to pay?

[JohnBu]

Bulk payout is the ballon or residual.

Say a 3 year lease, you can choose a ballon of 40 to 60% of the original loan.

Lower ballon = higher repayments during the 3 years


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[poita]

So in theory you would sell the car, hoping to get that balloon amount for it so you don't end up with a massive payout?

[JohnBu]

No not really, I haven't seen a novated lease with less than 100% finance.

What you may want to consider is the employee contribution method.. Use your own money to pay for fuel, rego, service. This will reduce your FBT.

Oh, speak to your accountant.


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[2002_XC]

Benefits depend on your yearly earnings before tax... For us it brings rorys wage down into the lower tax bracket. Once the nub comes.off lease we are getting another novated lease

[JohnBu]

Most people pay out the ballon with their own money and the sell the car for more than the ballon.


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[2002_XC]

And you only have to pay it out if you decide to keep it you can either give it back or sell it privately or keep it and pay it out

[JohnBu]

Oh yeah, another major benefit of novated leases is you effectively buy the car GST free.


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[poita]

Thanks for all the info guys

Still wondering which way to do it, I have been offered a car loan at 8.49%

So till deciding.

so much to think about

[2002_XC]

As an example the cruise to buy retail rrp is about 32k. The lease quote shows as 27k (fleet discount and gst free) after three years the payout figure is 17k from memory. Theye nurb is cheaper to buy out than what we could possibly sell or buy it for

[poita]

That's the thing that worries me, no way would I have $17k lying around to pay in a lump sum

[2002_XC]

Then you hand it back and get another new

[2002_XC]

Pete have a look at a novated lease calculator it will give you a rough idea of the costs

[gmonkey]

So it can basically be like an endless plan?? 3yrs with one car paying a certain amount then at end of term renew a new one with a new car? Is there any fees or anything to doing that??

Also whats the repayments like? Its before tax so most is money that ur never see anyway, im now considering this due to im getting taxed 25% each pay.. I currently pay $110 a week on my car loan ($22k) would this be better?

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[2002_XC]

Find a online calculator and go from there. It does the figures for you and shows if you leased and compares with if you don't lease

[gmonkey]

Is there any options to reduce amount of km a year or is that a must minimum

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[2002_XC]

Its all inclusive so you have to also have to factor in how much you spend on petrol servicing, tyres insurance rego for the year plus repayments for the car

[2002_XC]

If you tel them you are going to do a certain amount of km then you have to do that otherwise you get penalised, but as john said speak to an accountant

[poita]

Most of the online ones make you fill in all your info, email, address, phone etc etc

I dont want them contacting until i want to get the car

The closet I could find was www.novatedleasedeals.com.au, put in make of car and how much you want to pay and it will show you what you can get.

Both for maintained and non-maintained leases.



So Kylie, there is no balloon payout if you just 'give the car back' and upgrade?

[gmonkey]

Just had a gander.. Looks much same as a loan.

$500 non maintained a month for $22k car

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[Vectracious]

have you made extra repayments into your mortgage? If you've got some spare money there, redraw and use it to buy the car - plus the interest rate is cheaper than a personal loan or lease.

[benzino]

some credit cards have compareable interest rates as well

or if you are willing to do some extra work you could just jump around on 1st year low interest cards (a few banks are <3% first 12 months)

[benzino]

If you tel them you are going to do a certain amount of km then you have to do that otherwise you get penalised, but as john said speak to an accountant

the more km you do, the lower the amount of tax you have to pay
0-14999km/yr = 26% tax (!!!) if I remember correctly
...
...
...
...
40001km+ = 7%

so it pays to drive like a mad beast every year

another benefit of novated lease is that you get insured through your employers fleet insurance which is often a cheaper option (for young blokes at least :p )

[2002_XC]

the more km you do, the lower the amount of tax you have to pay
0-14999km/yr = 26% tax (!!!) if I remember correctly
...
...
...
...
40001km+ = 7%

so it pays to drive like a mad beast every year

another benefit of novated lease is that you get insured through your employers fleet insurance which is often a cheaper option (for young blokes at least :p )

This has changed now

[poita]

have you made extra repayments into your mortgage? If you've got some spare money there, redraw and use it to buy the car - plus the interest rate is cheaper than a personal loan or lease.

we fixed our loan just before Isaac was born, just so we knew what our repayments where so we could budget better with one income.

it actually ends about the same time I will be getting the new car, so may even just re-finance the whole lot, again.......


some credit cards have compareable interest rates as well

or if you are willing to do some extra work you could just jump around on 1st year low interest cards (a few banks are <3% first 12 months)

there is no ****ing way im going to lump $40k on a credit card that has 18% interest on it

[benzino]

there is no ****ing way im going to lump $40k on a credit card that has 18% interest on it

who said anything about 18%? (if you have a credit card atm that is 18% you need to shop around!) lol

NAB has a 3% for 12 months
then st george has a 0.99%/12mths balance transfer card
then for the 3rd/4th/5th whatever year there are heaps of other <3% balance transfer cards

just a suggestion if the other types of lease end up taxing too much...
if you treat the credit card as a mortgage or personal loan, what's the difference? just put it in the freezer and take advantage of the low interest

[2002_XC]

And then you stuff up your credit rating by having a credit card application every 12 months ;)

[hazrd]

And then you stuff up your credit rating by having a credit card application every 12 months ;)

This

[Neeko]

Disregard what I just wrote...

To risky for me to post stuff, don't want to jeopardize my Business Managers License.
Best to talk to your accountant since either option may have benefits for you.

If you have a price for the car I could throw some figures at you at how much you could expect in weekly repayments for a consumer loan.

[poita]

who said anything about 18%? (if you have a credit card atm that is 18% you need to shop around!) lol

NAB has a 3% for 12 months
then st george has a 0.99%/12mths balance transfer card
then for the 3rd/4th/5th whatever year there are heaps of other <3% balance transfer cards

just a suggestion if the other types of lease end up taxing too much...
if you treat the credit card as a mortgage or personal loan, what's the difference? just put it in the freezer and take advantage of the low interest

first 12 mths is a low rate, but after that they charge through the ass.


straight from ANZ's site, for the platinum card.

7. Standard variable interest rate is 19.24% p.a. on purchases and 20.99% p.a. on cash advances as at Tuesday, 15 November 2011 and is subject to change.

[poita]

Thanks Neeko ;)

Ideally the plan is $40k on a car with a min of $10k deposit, that's my goal

[Nurb608]

Pete, i wouldn't look at novated lease if you're not earning over $80k, much cheaper getting a loan and not being tied to any mileage. But as others have said, speak to someone with a better financial background.

[gman]

I've had a few novated leases and being required to rack up the KM's kills the value of the car so you get killed both ways, either taxed for low km's or poor resale for high km's.

Even earning over $80k a year you usually come out flat vs a loan unless the car is seriously expensive, the lease term is short and it's a car that doesn't have depreciation like a concrete boat! (yes I know Mythbusters made a concrete boat and a lead ballon but you know what I mean! :) )

[gmonkey]

3yr with 15k kms looks to be the best term to do imo. Or maybe 20k kms

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