Novated lease - standard Vs fully maintained

[monkeyalan]

Are fully maintained leases really worth the money or just a bit of a rip off for lazy people?

my other half is about to start looking for a car to lease (probably a gti maybe gtd ) and it'll be the first experience with leasing so any info would be much appreciated.

cheers

[gareth_oau]

I've not had experience with novated leases, but if you go standard, I'd suggest it would be a hell of a lot easier for you to spend money on modifications

[mikinoz]

It depends on the definition of maintained.

If it is maintained by the lease company I'd probably avoid it. Our lease allows us to choose who does the work and then the lease company pay them direct, so we can choose service departments, tyres, and even had the car lowered under the lease.

This should always be taken with proper advice tailored to her financial position.

[monkeyalan]

cheers .

I'm a cynic by nature so if something seems to good to be true....

I just get the feeling with maintained you will be paying interest on fuel / servicing etc that you won't be using for 2 years.

[mikinoz]

That's not how a novated lease works bro. They deduct an amount from your pay and then allocate the repayments to the loan, and then the balance goes against operating costs like rego, insurance, fuel, tyres and servicing.

The loan is only for the car itself and is via a finance company, not the packaging company.

[bigfoot]

Are fully maintained leases really worth the money or just a bit of a rip off for lazy people?

i've been throught this exercise and...well it was a rip. maily because the servicing costs etc they price in are very high. also i drive fewer than 5000km a year. it might make more sense for a sales rep or someone who does 50,000km a year.

best thing to do is get some quotes for a normal loan (then factor in fuel, and servicing) and maintained leases and compare the two.

[brad]

i've been throught this exercise and...well it was a rip. maily because the servicing costs etc they price in are very high. also i drive fewer than 5000km a year. it might make more sense for a sales rep or someone who does 50,000km a year.

best thing to do is get some quotes for a normal loan (then factor in fuel, and servicing) and maintained leases and compare the two.

Generally, you need to knock out 16,000km a year to make a Novated Lease work - unless it's a very cheap car. Anything under 16,000km and FBT will kill you. 25,000km a year is better as the FBT comes down to 11% (IIRC).

I'm not sure what the OP means by Fully Maintained & Standard but my Novated Lease pays for the finance & all the operating costs such as fuel, insurance, maintenance & tyres. I choose who provides all these services & the money left over is given back to me at the end of the lease or I taper down my payments as the lease period draws to a close. For all that, I think the saving over other forms of financing a vehicle are only a couple of thousand a year.

[Angryman]

X2

You must do at least 25000 a year to make it worth it.....and my lease, this being my 4th one have all worked as described above....and you really need to be in a higher tax bracket to reap some serious taxation advantage

Generally, you need to knock out 16,000km a year to make a Novated Lease work - unless it's a very cheap car. Anything under 16,000km and FBT will kill you. 25,000km a year is better as the FBT comes down to 11% (IIRC).

I'm not sure what the OP means by Fully Maintained & Standard but my Novated Lease pays for the finance & all the operating costs such as fuel, insurance, maintenance & tyres. I choose who provides all these services & the money left over is given back to me at the end of the lease or I taper down my payments as the lease period draws to a close. For all that, I think the saving over other forms of financing a vehicle are only a couple of thousand a year.

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[stucam]

Novation is about reducing your taxable income, passing on GST costs and using a set and forget ownership. It is only effective if you earn over approx. $70k and you do 16,000 + kms. I personally love it, especially when you never have to have cash to pay for petrol etc. However, it doesn't promote environmental ethics: these leases encourage you to do a heap of kms. Stu.


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[monkeyalan]

she earns well into the top tax bracket and does about 20k a year so we're sure a novated lease is the way to go.

we're just unsure about if standard ( car only ) or maintained ( fuel ,servicing , insurance , rego etc included) is the way to go.

[brad]

fully maintained providing you can choose your insurer, fuel, carwashes, & maintenance provider. Paying for all your consumables in pretax dollars is what makes it worthwhile.

If she earns so much money, maybe she should chat to her accountant. Or is she like my wife? Earns a fortune but too stupid/tight to seek & pay for advice.

[stucam]

she earns well into the top tax bracket and does about 20k a year so we're sure a novated lease is the way to go.

we're just unsure about if standard ( car only ) or maintained ( fuel ,servicing , insurance , rego etc included) is the way to go.

Fully maintained. That's the point! It reduces your taxable income. Why would you have a novation without this! You may as well have a standard lease.


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[monkeyalan]

she is her company accountant

this is the first time she's ever had to deal with novated leases tho' as her workmates leases we're taken out with little knowledge before she started and seem to be quite bad ( restricted to who can carry out service etc ) and novated leases don't really exist in the uk ( home).

thanks for the info everyone , looks like a fully maintained lease with no restrictions is the way to go.

[brad]

My lease is with Maxia (only choice my employer offers). It isn't fantastic (the interest rate on the lease is usurous) but they are fairly flexible with everything else (eg: I can claim jars of wax, windscreen wash, etc).

The company to look into is the one that "invented" the Novated Lease. The name totally escapes me at the moment but IIRC they were Sydney based. Sorry I can't be more helpfull.

edit: The company is SMB. They appear to be called SGfleet now so maybe thay have turned into a pack of idiots

[99_FGT]

Agreed - make sure you can choose service provider, as YOU do not authorise what gets done and what gets paid. I've already used up my servicing and tyres allocation for the year after 6 months due to that (I have the choice of paying it and getting reimbursed - I only found that out later).
You get GST off petrol, and are supposed to get better rates on tyres as well. Plus car washing / detailing is included in the costs. Agreed the interest rate is porr to say the least, but the deduction in taxable income, as well as that capital off my mortgage made that worthwhile for me (at 20,000km pa)
Al..