Financing / Leasing a MK5 GTI

[dkgti]

Hi,

Both steve_td and adzy are correct. The reason: it depends on the individual's situation so there is no right or wrong answer.

Cost wise paying cash is always cheapest but there are other considerations including cash flow and requirement funds for investment to consider.

[Pharkus]

As always the way in which you finance your car depends upon your own personal circumstances.

Whilst you may be able to save some money by going the packaging route. You better make sure that you have done the sums correctly and factored in all the variables (cost of your car, expected km per year, % business use etc.) Sure you may "save" some tax, but get it wrong and you pay for it by potentially being subject to the highest rate (46.5%) rather than your marginal rate (if that is lower). You also have the cost of the time spent maintaining records etc., maybe costs incurred for more complicated income tax affairs. There's also the issue about getting audited by the ATO and penalties and interest if you have done it wrong.

Your HR department at work may not even allow you do package (more work for them?)

Depending upon the method you use for the calculation of your FBT liability with respect to your motor vehicle, I suggest that you had best understand fully the way the calculations work. If using the statutory method you may find that you will have to do road trips at the end of the year just to get your km's up becuase you didn't travel as far as you expected (are you not dminishing the resale value of your car more as you are forced to travel at a minimum 15,000km's a year whether or not you would actually have done so but for FBT considerations?)

Also, paying cash may not be the cheapest. You still have to consider the opportunity cost of what you could have done with that cash in the meantime.

[adzy]

Its not "incorrect"

It is correct for my situation, i can't guarantee a certain number of km a year. My GT had 26,000 on it after 2 years, the GTI has 2600 on it after a month as an example I'm working in outer suburbs for 5 months, but in august that could change if i move back in the city and end up doing less than 100km a week.

I also do a lot of contract work, so dont have a "regular" income like most people, so i need to have the security of knowing that if i have 2 or 3 months off (as i do most years) then im not worried about car repayments.

I am firmly of the belief though that one should not live beyond their means.

i also refuse to pay interest on a depreciating object.

As i run most of my work thru my own business i still get to claim deprectation, usage etc so i still get tax "beneift"

I have only ever paid cash for any vehicle i have owned for the above reasons and therefore my vehicle choices have been what i can afford not what i want. Gradually over the years i have been able to step up each time and can now afford to buy the cars that i want.

I still think that overall that the stragegy should work for most people.

Works for me as i get bored easily, and dont have to worry about being "locked in" to a 3 year, 4 year or 5 year "contract" and if i deceide to sell in the morning i dont have any penalties or residuals to worry about. My GT was for sale at 18 months old and i held on to it just over 2 years as i had a biit of a wait on the GTI.

Sorry mate - I meant incorrect as in not all novated leases are a waste of money, as we have both stated it depends on each individuals financial situation.

[Ramesh]

Re: Financing / Leasing a MK5 GTI

Ours is by fleet partners.
We like the fleet idea because everything is included ie service fuel tyres etc. I can pick where the car goes for service but the big plus I don't have to worry having enough $$$ when Rego etc is due as it's all done for us and after the lease I can hand back the car and get a new one. I did work out running cost before going into on the BMW I own and it worked out cheep to fleet if you included the tax benifts.
That's just us.

[mini2]

For the people who must own their car outright: associate lease.

[Pharkus]

Salary sacrificing a BMW? I trust that it is below the luxury car tax limit (though unlikely) and that you have looked at all the rules that go with salary sacrificing for a luxury car.

Generally, who does do these things properly anyhow?

[Ramesh]

Re: Financing / Leasing a MK5 GTI

No the BMW is the car we own. I use it as a show car at time the GTi is our daily run around hence the lack of mods