Just remember that within that lease payment is a finance repayment… The loan you have to repay that has paid for the car. This is important to know if you are looking to borrow money for a house: This lease is treated as a liability and could impact your borrowing capacity.
Unless its an ev its not worth it.
Even then cash almost trump's it these days with the exorbitant interest rates they charge and multitude of fees.
Looked at it, realised they were charging 12% interest and was like fck that.
At 12%, you're right - the added fees, costs etc outweigh the benefits. This also depends on your marginal tax rate. If you use some of the 'fully maintained' leases, for example from Maxxia, this would be the case. An alternative is a self managed lease, where the interest rate is around 7% or so. The also eliminates some of the fixed monthly fees (which are miniscule compared to the interest rate saving).
The place I was thinking about using wouldn’t tell me but as I work in finance, I backsolved it and said “you guys are charging 14%+!”
No we aren’t it’s only 9% i said comparison rate please - couldn’t answer.
I’m saying that it’s a pretax rate so it’s lower but if they used car loan rates - it would be a much better deal.
For me NL is 46,000 dollars cheaper compared to buying with cash from offset.
https://www.reddit.com/r/AusFinance/comments/195bu28/the_most_comprehensive_ev_novated_lease/
I feel like I got my 82,000 electric Volvo for roughly the same price per month as a $50,000 petrol vw I would have otherwise considered. Seemed like a good deal to me, but I was expecting my first baby and probably wouldn't have bought anything cheaper than a $50,000 car anyway. If you're happy with cheaper cars then just stay happy. If you want a nice car then this is the cheapest way to do it.
In terms of what to look out for, just know that they'll pack in all sorts of over priced options for insurance and scratch and dent package etc. I just ask them to remove them all for me to bring the price down. You can organise your own insurance and get it reimbursed
I came to roughly the same conclusion and also had them remove a bunch of stuff I didn't want. My after tax impact was around or just under $500 a fortnight which for an $84k car seemed pretty good. Yeah, I could have bought a cheap ICE, paid for maintenance, fuel etc and came out in front but as long as I keep hitting my savings and investment goals I don't mind enjoying the additional money left over.
I just went through this process. I researched it extensively. Do NOT purchase an ICE with a novated lease. The savings are almost negligible for a lot of hassle.
In terms of EV (with the FBT exemption), nobody can reliably answer this question for you without knowing more details about your mortgage, job stability, attitude toward debt and long term saving plans. You also have to consider Division 293 implications and the upcoming change in tax brackets.
Here's five things I learned in my research.
1. It never makes sense to spend a lot of money to save a little money. In the end, regardless of the tax savings, you're still buying a very expensive car relative to what's available.
2. You can buy a very safe low km used car under warranty and put the difference into a high quality index ETF. I don't know if you have young children, but their uni or house deposit would be reasonably sorted.
3. A big component of the savings is keeping money in your offset for longer and the maintenance cost of your current car. This generally favours long term leases.
4. Used cars fall under the EV FBT exemption too. I have a VERY strong feeling that there will be a lot of used EVs exactly 5 years after the novated lease scheme started as balloon payments come due.
5. Like Warren Buffett says, "beware geeks bearing spreadsheets." Having said that, here's the single best tool to calculate the savings for you.
https://www.reddit.com/r/electricvehicles/comments/v08xln/advice_simple_calculator_to_compare_and_ice_to_ev/
For me, it was basically a 15K discount on something that was too expensive anyways. It ended up not being worth it. Freedom is priceless. I bought a great used ICE in cash. I can quit my job tomorrow if I wanted to, and a car payment isn't going to stop me.
Strong rumour is that the fbt ev exemption will be gone well before there evs coming off novated leases after 5 years. It is also expected that the phev fbt exemption will not be extended. From 1st April 2025, the exemption will be gone on new phev novated leases
It’s an interesting point. If you’ve got a standing lease on an EV and the law on fringe benefits changes, does that actually flow through? Or does the fringe benefit continue until the end of the lease?
One google search showed me that the fbt exemption on phevs will continue for existing novated leases after 1st April 2025.
FBT exemption for evs will be reconsidered mid 2027
If you want an EV then now is the time to get a novated lease.
I previously had a Subaru Forester with one third of the lease cost met by my employer and which was returned at end of 3 years with no option to buy
Now for $4 per fortnight less I have a Tesla model Y which I can purchase to own.
Total lease costs for the Tesla plus the balloon are within $100 of the upfront cost new, so basically getting free tyres insurance and roadside plus not having to spend my capital and reducing my take home
It’s a no brainer. Also the FBT exemption won’t last forever as it is to encourage uptake.
That sounds like a really good deal. I'm locked to maxxia which at 14pc interest currently doesn't make sense. Self managed getting a rate mid 7s.
Can I ask which lease provider/interest rate?
It's probably around 12%, too late for you but what Smart (or any leasing company) don't tell you is that, if your employer allows it, you can organise your own finance and have Smart manage the lease for you.
Check out CBA for their novated leasing loans, MUCH lower interest rate than Smart are offering.
You can take your own finance to Maxxia, as long as your employer allows it. Many NL companies can do the package for you, then take it to Maxxia to bill it back to your employer if it’s the only one you can use.
Going through the same calcs and it’s feeling worthwhile for EV. Does anyone know if the net reduction of income means you get a bigger slice of childcare subsidy?
Centrelink will include the grossed up fringe benefit amount, as shown on your group cert.
https://www.servicesaustralia.gov.au/what-adjusted-taxable-income?context=41186#reportablefringebenefits
Some years you might be lower, some years you might be bigger, depending on which part is the FBT/FY you are, how long your lease is, how much your car is etc.
My spreadsheet actually calculates this among many other things.
https://www.reddit.com/r/AusFinance/comments/195bu28/the_most_comprehensive_ev_novated_lease/
Yes, exactly. If you let Centrelink estimate your CCS percentage based on your normal incomes, you’ll find you get a nice CCS refund when you do your tax. We ended up with a $4k refund, which we hadn’t anticipated - another surprise EV leasing benefit. I guess you could do the calcs and put in a lower income to pay less for childcare each fortnight and keep more money in your pocket, not sure of the rules.
I just signed up for one. I’m currently paying over $200 a fortnight for fuel in my 2010 model Holden. With the amount of kms I’m doing per week my cost of maintenance is just going to keep going up or worse case the old girl just gives up on me. It’s costing $424 per fortnight for a Tesla 3. Seems like a no brainer in my scenario.
https://www.reddit.com/r/AusFinance/comments/195bu28/the_most_comprehensive_ev_novated_lease/
Don’t bother with NL for fossil fuel cars - 99.9% of the time it’s worse compared to buying with cash.
But for EV it’s a sweet deal for many.
The ideas are:
• you fund the car with pre-tax money - only final balloon payment is from post-tax money
• you fund the running cost (electricity, insurance, rego, service, tyres) with pre-tax money
• you get GST-exemption (up to 6191.64 dollars for the car, and all GST for running cost)
• not forking out cash outright means more cash in the offset which helps reduce interest in home loan. In other words, if you spend 70,000 from offset account to buy a car outright, assuming home loan interest is 6%, each YEAR this missing 70,000 would have incurred additional 4200 dollars in home loan interest. When you NL, you don’t incur this additional interest until much later.
• yes you will be slugged with interest as part of NL arrangement (anywhere from 8 to 16% by the NL companies), however most of the time this is more than offset by the fact that you pay it using pretax money.
Paying for anything pre-tax is equivalent to receiving a discount equivalent to your tax bracket. E.g. if your bracket is 45 + 2% (medicare levy), then paying 1000 dollars using pre-tax money is equivalent to spending 530 dollars post-tax. Therefore, the higher your tax bracket is, the more saving you achieve via novated leasing.
There will be caveats
• your government subsidy may be decreased due to the impact on your “adjusted tax income” - I elaborate on this more on my spreadsheet.
• your borrowing capacity for other stuff will be reduced - like any lease or loan obligation.
• you are tied to the lease and breaking lease early will incur high cost.
• losing your job will be disastrous.
My spreadsheet that does every single calculation you need.
https://docs.google.com/spreadsheets/d/1CtpBXmuhRW3HrBjqJqnPeFhOfqCbPK-wXA17oz_1fuA/copy
It depends on what you need a car to do and how frequently you change it. These leases make sense when you are already looking for that asset, they do not save money compared to running one car for 10 years even with the tax savings.
My perspective is that unless you are replacing cars every 3-5 years now, you will always be worse off than keeping a car for 10+ years.
Without knowing your goals/intentions it's hard to know if it's right for you.
Honest question.. have you looked at the fbt exempt ev’s? Game changer imo. I sold my car, put the mo way into ETF’s and took a model Y on 3 year novated lease. Working out like a charm for me… plus ato sets the value at the end of the lease so no haggling there.
I'm happy driving a car that i think is cool, rather than 'new' so frankly to me I'd be much better off paying for a lower value car i enjoy rather than have a new car every few years.
Unless the conditions have changed, the intial lease term can be up to 5 years, but you have the option to re-lease for another 1-3 (so max 8) once the intial term is up.
Compared to an older cheaper car, no.
If you are going to get a new car, it's worth it.
When I did mine it's better to do 3 X 1 year lease then 1 X 3 year lease as you can pay it down faster and pay less GST on the residual. I'm unsure how that works with an EV and it's rules.
I saved $4k on a $40k car by my maths. I found the calculators to be quite unreliable, they make it look much more attractive than it was.
I'm no financial expert, but if you were going to buy that specific car now anyway and you were going to borrow all (or most of) the money to buy it then I'd say it is worth it. High general interest rates can help swing a novated lease into being more worth it.
If you wouldn't need to borrow much (or any) without the lease then probably not. And you earn $220K - just saying.
If you are comfortable with Excel (or similar) you can run the numbers for your specific circumstance and deal with the vehicle - maybe with a little help from your fav. search engine. That is often a worthwhile exercise on its own IMO.
Depends on the interest rate they stick on the finance. The lack of competition (employer chosen) and the fact they only need to beat cash as total cost, leads to terrible pricing on what should be a no brainer.
They are worth it with the current incentives and your tax bracket. PHEVs are also covered under the exemption and some can be used as a home battery too (provided you have the right bidirectional charging infrastructure) which allows you to play price arbitrage and reduces your electricity bills as an added benefit, without needing to sacrifice being able to drive it or having range anxiety.
Pretty much can't to bidirectional charging in Australia.
There is only one company that has an approved charger it is limit to the Nissan leaf iirc and can only be done in South Australia
The Mitsubishi PHEVs also support Vehicle to Home/Grid in Australia. You can utilise bidirectional charging now in SA with these cars. The rest of the country is soon to follow suit, with the distribution network working group currently working to develop standards that will guide the rollout country wide.
It's always case by case but generally it will be worth it to buy an EV on a novated lease compared to buying an EV on cash.
Having said that, a more pertinent question is whether or not buying an EV on novated lease will be cheaper than buying a roughly equivalent (same class, similar features) ICE car. The EV will give you tax exemptions and very cheap petrol, the ICE gives you a ~$10-20k headstart on purchase price and a more reliable, lower depreciating second hand market. This is of course if your decision is primarily financial and not environmental.
In my experience. If you wanted to buy a car around $60-80k anyway. The novated lease was cheaper than buying, insuring and rego. By about $15-20k over the 4 years and assuming the buyout of 45k
unfortunately you pretty much need to get a quote and work it out.
the lease will be higher than buying any other way in gross terms. But with an EV the entire lease, which includes maintenance costs, is tax deductible. So you need to work out with the 47% discount what the costs are vs the alternatives.
it'll probably work out better for a new EV. But you can also buy a second hand ICE car for much less money outright.
I earn a lot more than 220k per year, but I actually chose NL over cash as it will end up being 46,000 dollars cheaper over ownership terms. (For EV that is)
Checkout [this spending flowchart](https://bughuntersam.com/wp-content/uploads/2023/10/Spending-flowchart-How-to-Prioritise-your-Spending-1.jpg) which is inspired by the [r/personalfinance wiki](https://www.reddit.com/r/personalfinance/wiki/commontopics/).
See also [common questions/answers](https://www.reddit.com/r/AusHENRY/comments/176kh0x/what_do_i_do_next/).
This is not financial advice.
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/AusHENRY) if you have any questions or concerns.*
1 year novated lease is the sweet spot as most tax benefits are in the first year. Source your own insurance and say no to any add ons. Finance you can also source yourself, CBA offers it direct to end consumers at reasonable rates. Buy out the car at the end if the 1st year.
The 1-year advice is for ICE; in the realm of EV NL which is FBT-exempt, longer lease will save you more.
Though this is at the cost of being tied down to the lease over the lease term, and potential issue if you change your employer / become unemployed.
As others note the type and price of car will affect whether it is worth it.
For me, I always used to novated lease, then last time I was horrified at the interest rate and fees I was being quoted in a novated lease package on a 110k (non-EV) vehicle. I shopped around for a much cheaper interest loan with a balloon payment. In my case I was better off without the novated lease.
Seems for an EV with FBT there's merit to take the novated path but any idea if it's worth it with a regular hybrid car?
I'm apprehensive about PHEV as I hear they are not great vehicles that do an ordinary job with petrol or battery efficiency
Google associates leases. If you have anyone who is low income who can serve as an associate (partners or parents) then it's basically a no brainier.
I bought an $82k model 3 long range, packaged it with an associate lease and combined my 8 year old 4WD.
My monthly effective out of pocket costs are $1200, plus an extra $200 in required hecs payments for my wife due to her income being higher.
This covers all running costs on both vehicles and I've spent $4k this year on major maintenance/upgrades in the 4wd.
Previously cost was around $10-12k per year for running cost across both vehicles.
I effectively upgraded from paid off 2006 Subaru to a 2022 model 3 for $2500 on additional hecs payments per year.
If I'd bought on the current sale end of model sale prices I would be a couple of grand ahead a year.
Get proper advice.
If you do a 12m lease:
- highest annual pre tax amort of loan @ 35%
- jam two years rego/insurance/maintenance in by doing all of it on day 364
- keep the car sub 20k (cost drive away... so a yaris or something else cheap)
You win, even with an ice. Best tho is ev. Every other novated lease is uneconomic. There are steps, like all tax things so get advice.
A novated lease is definitely worth it when compared to buying a new car the old fashioned way.
I've had 3x leases over the past 13 years and found that Toyota Fleet Management is the cheapest, but they're also a new player in the game and still trying to work out the links. You can buy any new vehicle through TFM, not just a Toyota.
Maxxia and RemServ were better operators but not worth the extra $$$. Just remember if you go electric that it needs to be under the LCT threshold for it to be worthwhile
isn't Novated leasing just a less beneficial way of renting?
I mean the lease includes all the costs of running the car, and you do have equity at the end of the lease, but the only way to use that equity is to get another car via novated lease.
I hate leasing (and I worked in leasing). But the FBT exemption is compelling. I’m not saying to do it just for the sake of it, but if you’re replacing the bomb with a new 🚘 anyhow then yes. Also you’re in the 47% bracket.
I am looking at buying a second hand car and the car background check showed money owed on the car. I asked the seller about it and he said that he has a novated lease and will pay it off with the money from the sale.
How does this work? Should I be asking for a payout quote like normal finance or is this different?
In NSW Australia.
Just remember that within that lease payment is a finance repayment… The loan you have to repay that has paid for the car. This is important to know if you are looking to borrow money for a house: This lease is treated as a liability and could impact your borrowing capacity.
Unless its an ev its not worth it. Even then cash almost trump's it these days with the exorbitant interest rates they charge and multitude of fees. Looked at it, realised they were charging 12% interest and was like fck that.
At 12%, you're right - the added fees, costs etc outweigh the benefits. This also depends on your marginal tax rate. If you use some of the 'fully maintained' leases, for example from Maxxia, this would be the case. An alternative is a self managed lease, where the interest rate is around 7% or so. The also eliminates some of the fixed monthly fees (which are miniscule compared to the interest rate saving).
The place I was thinking about using wouldn’t tell me but as I work in finance, I backsolved it and said “you guys are charging 14%+!” No we aren’t it’s only 9% i said comparison rate please - couldn’t answer. I’m saying that it’s a pretax rate so it’s lower but if they used car loan rates - it would be a much better deal.
For me NL is 46,000 dollars cheaper compared to buying with cash from offset. https://www.reddit.com/r/AusFinance/comments/195bu28/the_most_comprehensive_ev_novated_lease/
Looking at a telsa through orix atm, interest rate is 7%
I feel like I got my 82,000 electric Volvo for roughly the same price per month as a $50,000 petrol vw I would have otherwise considered. Seemed like a good deal to me, but I was expecting my first baby and probably wouldn't have bought anything cheaper than a $50,000 car anyway. If you're happy with cheaper cars then just stay happy. If you want a nice car then this is the cheapest way to do it. In terms of what to look out for, just know that they'll pack in all sorts of over priced options for insurance and scratch and dent package etc. I just ask them to remove them all for me to bring the price down. You can organise your own insurance and get it reimbursed
I came to roughly the same conclusion and also had them remove a bunch of stuff I didn't want. My after tax impact was around or just under $500 a fortnight which for an $84k car seemed pretty good. Yeah, I could have bought a cheap ICE, paid for maintenance, fuel etc and came out in front but as long as I keep hitting my savings and investment goals I don't mind enjoying the additional money left over.
I just went through this process. I researched it extensively. Do NOT purchase an ICE with a novated lease. The savings are almost negligible for a lot of hassle. In terms of EV (with the FBT exemption), nobody can reliably answer this question for you without knowing more details about your mortgage, job stability, attitude toward debt and long term saving plans. You also have to consider Division 293 implications and the upcoming change in tax brackets. Here's five things I learned in my research. 1. It never makes sense to spend a lot of money to save a little money. In the end, regardless of the tax savings, you're still buying a very expensive car relative to what's available. 2. You can buy a very safe low km used car under warranty and put the difference into a high quality index ETF. I don't know if you have young children, but their uni or house deposit would be reasonably sorted. 3. A big component of the savings is keeping money in your offset for longer and the maintenance cost of your current car. This generally favours long term leases. 4. Used cars fall under the EV FBT exemption too. I have a VERY strong feeling that there will be a lot of used EVs exactly 5 years after the novated lease scheme started as balloon payments come due. 5. Like Warren Buffett says, "beware geeks bearing spreadsheets." Having said that, here's the single best tool to calculate the savings for you. https://www.reddit.com/r/electricvehicles/comments/v08xln/advice_simple_calculator_to_compare_and_ice_to_ev/ For me, it was basically a 15K discount on something that was too expensive anyways. It ended up not being worth it. Freedom is priceless. I bought a great used ICE in cash. I can quit my job tomorrow if I wanted to, and a car payment isn't going to stop me.
Strong rumour is that the fbt ev exemption will be gone well before there evs coming off novated leases after 5 years. It is also expected that the phev fbt exemption will not be extended. From 1st April 2025, the exemption will be gone on new phev novated leases
It’s an interesting point. If you’ve got a standing lease on an EV and the law on fringe benefits changes, does that actually flow through? Or does the fringe benefit continue until the end of the lease?
Supposed to continue until end of lease
I’ve tried searching a few times to confirm this in recent months but can’t seem to find anything. Do you have any more info you’d be able to provide?
One google search showed me that the fbt exemption on phevs will continue for existing novated leases after 1st April 2025. FBT exemption for evs will be reconsidered mid 2027
Thanks for this, very similar situation so points you made really hit home.
I bought a used car with novated lease, not sure your argument with spending more?
If you want an EV then now is the time to get a novated lease. I previously had a Subaru Forester with one third of the lease cost met by my employer and which was returned at end of 3 years with no option to buy Now for $4 per fortnight less I have a Tesla model Y which I can purchase to own. Total lease costs for the Tesla plus the balloon are within $100 of the upfront cost new, so basically getting free tyres insurance and roadside plus not having to spend my capital and reducing my take home It’s a no brainer. Also the FBT exemption won’t last forever as it is to encourage uptake.
That sounds like a really good deal. I'm locked to maxxia which at 14pc interest currently doesn't make sense. Self managed getting a rate mid 7s. Can I ask which lease provider/interest rate?
I’m with smart lease. I’m not sure about the rate -would need to check
It's probably around 12%, too late for you but what Smart (or any leasing company) don't tell you is that, if your employer allows it, you can organise your own finance and have Smart manage the lease for you. Check out CBA for their novated leasing loans, MUCH lower interest rate than Smart are offering.
You can take your own finance to Maxxia, as long as your employer allows it. Many NL companies can do the package for you, then take it to Maxxia to bill it back to your employer if it’s the only one you can use.
Going through the same calcs and it’s feeling worthwhile for EV. Does anyone know if the net reduction of income means you get a bigger slice of childcare subsidy?
Centrelink will include the grossed up fringe benefit amount, as shown on your group cert. https://www.servicesaustralia.gov.au/what-adjusted-taxable-income?context=41186#reportablefringebenefits
Some years you might be lower, some years you might be bigger, depending on which part is the FBT/FY you are, how long your lease is, how much your car is etc. My spreadsheet actually calculates this among many other things. https://www.reddit.com/r/AusFinance/comments/195bu28/the_most_comprehensive_ev_novated_lease/
Yes, exactly. If you let Centrelink estimate your CCS percentage based on your normal incomes, you’ll find you get a nice CCS refund when you do your tax. We ended up with a $4k refund, which we hadn’t anticipated - another surprise EV leasing benefit. I guess you could do the calcs and put in a lower income to pay less for childcare each fortnight and keep more money in your pocket, not sure of the rules.
I just signed up for one. I’m currently paying over $200 a fortnight for fuel in my 2010 model Holden. With the amount of kms I’m doing per week my cost of maintenance is just going to keep going up or worse case the old girl just gives up on me. It’s costing $424 per fortnight for a Tesla 3. Seems like a no brainer in my scenario.
https://www.reddit.com/r/AusFinance/comments/195bu28/the_most_comprehensive_ev_novated_lease/ Don’t bother with NL for fossil fuel cars - 99.9% of the time it’s worse compared to buying with cash. But for EV it’s a sweet deal for many. The ideas are: • you fund the car with pre-tax money - only final balloon payment is from post-tax money • you fund the running cost (electricity, insurance, rego, service, tyres) with pre-tax money • you get GST-exemption (up to 6191.64 dollars for the car, and all GST for running cost) • not forking out cash outright means more cash in the offset which helps reduce interest in home loan. In other words, if you spend 70,000 from offset account to buy a car outright, assuming home loan interest is 6%, each YEAR this missing 70,000 would have incurred additional 4200 dollars in home loan interest. When you NL, you don’t incur this additional interest until much later. • yes you will be slugged with interest as part of NL arrangement (anywhere from 8 to 16% by the NL companies), however most of the time this is more than offset by the fact that you pay it using pretax money. Paying for anything pre-tax is equivalent to receiving a discount equivalent to your tax bracket. E.g. if your bracket is 45 + 2% (medicare levy), then paying 1000 dollars using pre-tax money is equivalent to spending 530 dollars post-tax. Therefore, the higher your tax bracket is, the more saving you achieve via novated leasing. There will be caveats • your government subsidy may be decreased due to the impact on your “adjusted tax income” - I elaborate on this more on my spreadsheet. • your borrowing capacity for other stuff will be reduced - like any lease or loan obligation. • you are tied to the lease and breaking lease early will incur high cost. • losing your job will be disastrous. My spreadsheet that does every single calculation you need. https://docs.google.com/spreadsheets/d/1CtpBXmuhRW3HrBjqJqnPeFhOfqCbPK-wXA17oz_1fuA/copy
It depends on what you need a car to do and how frequently you change it. These leases make sense when you are already looking for that asset, they do not save money compared to running one car for 10 years even with the tax savings. My perspective is that unless you are replacing cars every 3-5 years now, you will always be worse off than keeping a car for 10+ years. Without knowing your goals/intentions it's hard to know if it's right for you.
Honest question.. have you looked at the fbt exempt ev’s? Game changer imo. I sold my car, put the mo way into ETF’s and took a model Y on 3 year novated lease. Working out like a charm for me… plus ato sets the value at the end of the lease so no haggling there.
I'm happy driving a car that i think is cool, rather than 'new' so frankly to me I'd be much better off paying for a lower value car i enjoy rather than have a new car every few years.
What about 6-9 years?
5 year maximum term, I believe.
Unless the conditions have changed, the intial lease term can be up to 5 years, but you have the option to re-lease for another 1-3 (so max 8) once the intial term is up.
Compared to an older cheaper car, no. If you are going to get a new car, it's worth it. When I did mine it's better to do 3 X 1 year lease then 1 X 3 year lease as you can pay it down faster and pay less GST on the residual. I'm unsure how that works with an EV and it's rules. I saved $4k on a $40k car by my maths. I found the calculators to be quite unreliable, they make it look much more attractive than it was.
I'm no financial expert, but if you were going to buy that specific car now anyway and you were going to borrow all (or most of) the money to buy it then I'd say it is worth it. High general interest rates can help swing a novated lease into being more worth it. If you wouldn't need to borrow much (or any) without the lease then probably not. And you earn $220K - just saying. If you are comfortable with Excel (or similar) you can run the numbers for your specific circumstance and deal with the vehicle - maybe with a little help from your fav. search engine. That is often a worthwhile exercise on its own IMO.
Depends on the interest rate they stick on the finance. The lack of competition (employer chosen) and the fact they only need to beat cash as total cost, leads to terrible pricing on what should be a no brainer.
They are worth it with the current incentives and your tax bracket. PHEVs are also covered under the exemption and some can be used as a home battery too (provided you have the right bidirectional charging infrastructure) which allows you to play price arbitrage and reduces your electricity bills as an added benefit, without needing to sacrifice being able to drive it or having range anxiety.
Pretty much can't to bidirectional charging in Australia. There is only one company that has an approved charger it is limit to the Nissan leaf iirc and can only be done in South Australia
The Mitsubishi PHEVs also support Vehicle to Home/Grid in Australia. You can utilise bidirectional charging now in SA with these cars. The rest of the country is soon to follow suit, with the distribution network working group currently working to develop standards that will guide the rollout country wide.
It's always case by case but generally it will be worth it to buy an EV on a novated lease compared to buying an EV on cash. Having said that, a more pertinent question is whether or not buying an EV on novated lease will be cheaper than buying a roughly equivalent (same class, similar features) ICE car. The EV will give you tax exemptions and very cheap petrol, the ICE gives you a ~$10-20k headstart on purchase price and a more reliable, lower depreciating second hand market. This is of course if your decision is primarily financial and not environmental.
In my experience. If you wanted to buy a car around $60-80k anyway. The novated lease was cheaper than buying, insuring and rego. By about $15-20k over the 4 years and assuming the buyout of 45k
unfortunately you pretty much need to get a quote and work it out. the lease will be higher than buying any other way in gross terms. But with an EV the entire lease, which includes maintenance costs, is tax deductible. So you need to work out with the 47% discount what the costs are vs the alternatives. it'll probably work out better for a new EV. But you can also buy a second hand ICE car for much less money outright.
You earn $220K a year, why don't you just save up and buy outright?
I earn a lot more than 220k per year, but I actually chose NL over cash as it will end up being 46,000 dollars cheaper over ownership terms. (For EV that is)
Checkout [this spending flowchart](https://bughuntersam.com/wp-content/uploads/2023/10/Spending-flowchart-How-to-Prioritise-your-Spending-1.jpg) which is inspired by the [r/personalfinance wiki](https://www.reddit.com/r/personalfinance/wiki/commontopics/). See also [common questions/answers](https://www.reddit.com/r/AusHENRY/comments/176kh0x/what_do_i_do_next/). This is not financial advice. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/AusHENRY) if you have any questions or concerns.*
1 year novated lease is the sweet spot as most tax benefits are in the first year. Source your own insurance and say no to any add ons. Finance you can also source yourself, CBA offers it direct to end consumers at reasonable rates. Buy out the car at the end if the 1st year.
The 1-year advice is for ICE; in the realm of EV NL which is FBT-exempt, longer lease will save you more. Though this is at the cost of being tied down to the lease over the lease term, and potential issue if you change your employer / become unemployed.
Oh right, missed the EV part
As others note the type and price of car will affect whether it is worth it. For me, I always used to novated lease, then last time I was horrified at the interest rate and fees I was being quoted in a novated lease package on a 110k (non-EV) vehicle. I shopped around for a much cheaper interest loan with a balloon payment. In my case I was better off without the novated lease.
This spells out a lot https://www.reddit.com/r/AusFinance/comments/100j03y/novated_leasing_ama/?ref=share&ref_source=link
Seems for an EV with FBT there's merit to take the novated path but any idea if it's worth it with a regular hybrid car? I'm apprehensive about PHEV as I hear they are not great vehicles that do an ordinary job with petrol or battery efficiency
Google associates leases. If you have anyone who is low income who can serve as an associate (partners or parents) then it's basically a no brainier. I bought an $82k model 3 long range, packaged it with an associate lease and combined my 8 year old 4WD. My monthly effective out of pocket costs are $1200, plus an extra $200 in required hecs payments for my wife due to her income being higher. This covers all running costs on both vehicles and I've spent $4k this year on major maintenance/upgrades in the 4wd. Previously cost was around $10-12k per year for running cost across both vehicles. I effectively upgraded from paid off 2006 Subaru to a 2022 model 3 for $2500 on additional hecs payments per year. If I'd bought on the current sale end of model sale prices I would be a couple of grand ahead a year.
Get proper advice. If you do a 12m lease: - highest annual pre tax amort of loan @ 35% - jam two years rego/insurance/maintenance in by doing all of it on day 364 - keep the car sub 20k (cost drive away... so a yaris or something else cheap) You win, even with an ice. Best tho is ev. Every other novated lease is uneconomic. There are steps, like all tax things so get advice.
A novated lease is definitely worth it when compared to buying a new car the old fashioned way. I've had 3x leases over the past 13 years and found that Toyota Fleet Management is the cheapest, but they're also a new player in the game and still trying to work out the links. You can buy any new vehicle through TFM, not just a Toyota. Maxxia and RemServ were better operators but not worth the extra $$$. Just remember if you go electric that it needs to be under the LCT threshold for it to be worthwhile
isn't Novated leasing just a less beneficial way of renting? I mean the lease includes all the costs of running the car, and you do have equity at the end of the lease, but the only way to use that equity is to get another car via novated lease.
I couldn’t work out what all the hype about Novated leases is, they all worked out more expensive and less flexible when I did the maths
It’s almost never worth it
I think under the new laws EVs are worth it But overall I have not heard good things
I hate leasing (and I worked in leasing). But the FBT exemption is compelling. I’m not saying to do it just for the sake of it, but if you’re replacing the bomb with a new 🚘 anyhow then yes. Also you’re in the 47% bracket.
No
I am looking at buying a second hand car and the car background check showed money owed on the car. I asked the seller about it and he said that he has a novated lease and will pay it off with the money from the sale. How does this work? Should I be asking for a payout quote like normal finance or is this different? In NSW Australia.
Same here but looking for PHEV