15000 km report

[thefullback]

The Car.
reflex silver 2.0ltr sportline manual, Exis stp 17 inch alloys, Yokohama C drives
225/45/r17
The Deal.
Novated lease, capital value $37,020, 50,000 kms per year for 4 years
cost 1,600 per month incl FBT
The dealer.
Denlo motors paramatta
The story.
After extensive research and test driving decided on this car and added the wheels, was not considering anything other than a diesel.
Picked up on 20/7 and must admit the Denlo presentation was impressive.
I'm lovin it. this car is fantastic, good performance comfort and dynamics and guess what, not even one minor warranty issue so far.
Average consumption is 5.6 ltrs/100 kms, based on monthly vehicle report, my daily drive is a mix of both city traffic and freeway cruising.
After 10,000 kms an oil top up was required approx .5 ltr which the dealer did for nothing while I waited.
Just had 15,000 kms service and tyre rotation with above dealer. the cost was $193 paid by lease of course. this is the cheapest service I've had in years. 8mm left on front and rear pads, does anyone know how much you start with or what this may = in kms
So far so good
Cheers
thefullback

[Transporter]

Mate it will cost you $76,800 after 4 years. Will the car be yours after 4 years or do you have to pay something to buy it out?
I know you probably have insurance , rego and fuel paid by lease, but even than money in the bank will earn you profit and if you use the saving account to buy a car than you paid $37,000 and good portion of that $37,000 was interest $$ earned on your money.
So, what did I mised:
$76,800 (you have to pay monthly $1,600)
-$16,500 fuel @ $1.5/L up to 200,000km @5.5L/100km (it could be beter since you drive long trips)
- 13xservice every 15,000km @ $300.00 each = $4,900
- $2,400 rego 4 years
-$2,400 insurance 4years
-16tyres @ $200 each = $3200
It all adds up tu $66,400
you are still $10,000 out of pocket and at least $ 2,000 in generated interest only on that $10,000.
Let me know if anything else is in that deal.

[NickZ]

you are still $10,000 out of pocket and at least $ 2,000 in generated interest only on that $10,000.
Let me know if anything else is in that deal.

FBT - once you earn enough and / or drive a lot of ks, it pays to lease a car - the tax savings compensate well and truly for the interest.

Especially if he drives 50,000km per year, he would be crazy not to novate lease the car. The FBT rate is 7% with that much ks, which even after gross up etc, is still way ahead of income tax rate of up to 46.5%!

[Transporter]

FBT - once you earn enough and / or drive a lot of ks, it pays to lease a car - the tax savings compensate well and truly for the interest.

Especially if he drives 50,000km per year, he would be crazy not to novate lease the car. The FBT rate is 7% with that much ks, which even after gross up etc, is still way ahead of income tax rate of up to 46.5%!

Not if you saved for the car. Nobody gives you something for nothing. Somebody is paying, and I don't see the bank loosing money.

[NickZ]

I see what your saying, but its not the bank that loses out, its the government! Remember that driving that many K's, he will use a lot of fuel (14,000L if he averages 7 per 100!), and the car will be worthless at the end of it all.

To do a rough calc, say you are on the top tax bracket. Assuming a capital value of $37,200 and 40000+ km per year, you pay FBT of a little over $200 per month on his lease payments! If he took this out of his after tax pay, then paid $1,400 ($1,600 - $200 of FBT) per month on lease payments, he would pay income tax of around $1,150 per month.

So he is saving say $900 per month just by leasing his car. This will more than compensate for interest (which assuming say 10% is $3,720 per year or around $310 per month).

Even at a 30% bracket, there is still a substantial saving, and it is the way the FBT rates for cars is structured. If you drive more than 40000km per year, you would be crazy not to novate lease your car.

[NickZ]

Not to mention the company gets a partial GST deduction on the car, and if you have the money in the bank, it will stay earning interest at the bank or wherever you choose to invest, rather than being depreciated on a car!

[Transporter]

Not to mention the company gets a partial GST deduction on the car, and if you have the money in the bank, it will stay earning interest at the bank or wherever you choose to invest, rather than being depreciated on a car!

Well Mate government doesn't loose money government collect taxes and increase them when needed, so I think we are all loosing.

[dotnet]

Well Mate government doesn't loose money government collect taxes and increase them when needed, so I think we are all loosing.

Undoubtedly, but as Nick said, playing the tax game will have thefullback pay only a bit over half of the $76,800 you tallied up (assuming he's in the right tax bracket). That makes it a really good deal for him.

I've been on operating leases for 11 years now, and don't look back to owning cars.

Cheers
Steffen.

[BeigeJet]

Undoubtedly, but as Nick said, playing the tax game will have thefullback pay only a bit over half of the $76,800 you tallied up (assuming he's in the right tax bracket). That makes it a really good deal for him.

I've been on operating leases for 11 years now, and don't look back to owning cars.

Cheers
Steffen.

I agree with Steffen, leasing particularly novated leases are an effective way to reduce tax paid and have the benefit of a vehicle of choice.

I have a novated lease and even though it's effectively reduced my gross income it means I can fund a vehicle that would otherwise cost me more if I paid income tax on total salary and then pay fianance and running costs. Also it was mentioned about the GST credit a company recieves. This includes on all running costs AND the GST tax input credit is passed on the leasee. In 2000 though the Govt re assessed the FBT calculation so they didn't loose out completely but the difference still means a novated lease is very favourable for the majority of employees whose employers allow/provide for novated leases.
Based on the info Thefullback has indicated I think he/she will probably get some money back at the end of lease as the actual running costs would be lower the budget. I know on my case I will probably get something like $4,000 back, mostly around fuel. Budgeted @ 6L/100k @ $1.50L (exc GST) and actual so far after 27,000km got 6.1L/100k @ $1.105 (info supplied from NLC leasing)

[thefullback]

heres a few more actual figures to contemplate
NB i dont expect to drive for nothing, my chances of moving the family to the smoke = zero, money to be made in sydney is at least 2.5 times higer than the coast, for this I demand a good car.
the actual up front cost of a leased car is cheaper
Recom Retail Lease
Car
on road 39559 34514
wheels + tyres 3000 2500
total 42559 37014
these were actual quotes including dealer deliv and rego NB leasers only pay GST on residual value of car in my case $13000, car was actually $1000 cheaper than Quote when delivered.
I look at the effect of the lease on your after tax income eg monthly $1600,
average tax 40c/$, actual cost to you 960/ month, then factor in the costs after tax as if you were running the car over the same distance, rego $500, Ins $900, service* 3 $900, tyres $1000, fuel 50000/100*5.5*$1.40=$3850. costs/month=$595. So the car actually costs you $100 per week.
I usually end up 4 to $6000 ahead, subtract that from residual then sell car for $10000 to brake even. I have managed to do this on numerous occasions.
You can then take the $40000 (you didnt spend) and put it in your super @ 10% interest and make $18564.
NB service costs, parts and fuel are also GST free
Works for me
thefullback

[Lima]

If MRL T5 wants to have a go at fullback for leasing his car, I'm going to have a go at MRL T5 for his spelling.

There is, always has been and always will be only one "o" in lose, when talking about losing money.

Farkn!

fullback, I couldn't give a toss how you're paying for your car, just glad to read you're a happy customer! I hope you keep it shiney side up and enjoy for many more kilometres to come.

[Transporter]

If MRL T5 wants to have a go at fullback for leasing his car, I'm going to have a go at MRL T5 for his spelling.

There is, always has been and always will be only one "o" in lose, when talking about losing money.

Farkn!

fullback, I couldn't give a toss how you're paying for your car, just glad to read you're a happy customer! I hope you keep it shiney side up and enjoy for many more kilometres to come.

Well you aren't perfect too. There is always only "one" ?. Didn't you learn that at school?