Help in choosing a salary packaging provider

[Tiggy]

Am faced with the choice of three salary packaging providers, namely; Maxxia, Selectus and Paradigm ...

My intention is to avail of a novated lease, laptop and celphone salary package.

What should I focus on when choosing which one of the three I should go with?

More importantly, I want to avail of lower leasing rates and operating costs (novated lease).

I was made to understand the interest rate of the novated lease cannot be disclosed openly to the end-user. And the only thing made public is the online salary package calculator which I feel isn't that accurate. I believe I should add $50.00 to $100.00 on top of the calculated results as safety net.

Is there material (online or hardcopy) that I can read through to guide me with this query?

Cheers ....

[Martin]

A few of my friends use a novated lease
The main reason they use it is to spread cost evenly and avoid deposit issues and final disposal risks
The cost is the same every month, regardless of the battery dying, repairs, maintenance, rego, etc
But nothing comes for free, if you do a cashflow analysis you will find that the lease provider
is obtaining the most benefit from your pre tax income - not you

I'm not sure what happens if you have a change in circumstances during the lease, changing jobs, how to get out of the lease

[The_Hawk]

I have a novated lease for the Van.

For me it works well, it puts away all the cash to pay for everything (fuel/maintenance/insurance etc etc) so I just pull the magical card out of my wallet and everything is done for "free" And when you work out the pre and post tax components in my payment I'm still in front of what it would cost me paying it out of my own pocket.

At the time the interest rate was on par with the best rate I could get and the cost of the vehicle was good too.

The downside is that my lease isn't interest reducible so an early payout can be bloody expensive, not that that is on the cards in our case.

Reducing my taxable income has other benefits too, so it's a bit of a no brainer for me, but it's definitely worth doing your sums.

PS. I don't use any of those providers.

[Ideo]

I have a novated lease for the Van.

For me it works well, it puts away all the cash to pay for everything (fuel/maintenance/insurance etc etc) so I just pull the magical card out of my wallet and everything is done for "free" And when you work out the pre and post tax components in my payment I'm still in front of what it would cost me paying it out of my own pocket.

At the time the interest rate was on par with the best rate I could get and the cost of the vehicle was good too.

The downside is that my lease isn't interest reducible so an early payout can be bloody expensive, not that that is on the cards in our case.

Reducing my taxable income has other benefits too, so it's a bit of a no brainer for me, but it's definitely worth doing your sums.

PS. I don't use any of those providers.

What he said.

I am also at 85% business usage for my car and travel high kms a year so a novated lease works out very well for me. For lower kms I wouldn't really bother to be honest.

[Dutch77]

You should be able to work out the implied interest rate if the packager provides a breakdown of the figures - I'd be hesitant to use anyone who isn't willing to do so.

Changing positions shouldn't effect the lease as such - particularly if you are changing jobs and it can continue there - that was one reason novated leasing became popular.. employers no longer were on the hook for cars they didn't want when employees left.

The mileage issue was more applicable in the old days when higher mileage equated to less FBT under the 'statutory method'; that no longer applies (and is being grandfathered out for pre-existing arrangements). Even low mileage cars with high business use percentage can still end up potentially saving under a packaged deal. As usual, disclaimers apply and seek your own advice though.

[goodfella]

Am faced with the choice of three salary packaging providers, namely; Maxxia, Selectus and Paradigm ...

My intention is to avail of a novated lease, laptop and celphone salary package.

What should I focus on when choosing which one of the three I should go with?

More importantly, I want to avail of lower leasing rates and operating costs (novated lease).

I was made to understand the interest rate of the novated lease cannot be disclosed openly to the end-user. And the only thing made public is the online salary package calculator which I feel isn't that accurate. I believe I should add $50.00 to $100.00 on top of the calculated results as safety net.

Is there material (online or hardcopy) that I can read through to guide me with this query?

Cheers ....

At our business, we have just brought in SmartSalary as the salary packaging facilitator. They allow the use of 3rd party finance, and I have just about renegotiated every facet of costs for my package. Ultimately dropping my monthly costs by about 100 per month (over 36mths) . Ask your 3 suppliers if they allow 3rd party finance as well, this allows you to source the best rates for yourself.

The reason they wont disclose rates is due to the fees included.. something that finance companies dont like to reveal up front.

[The_Hawk]

My salary package company was pretty open about what rate was being paid and how things worked. I'm also under the old rules so have a good FBT rate too for the KM I do. Bonus is also your lower your taxable income which can have other flow on benefits too

With the changes made to the way leasing works even those who do under 15,000km / year can still see a saving vs doing things privately.

I had a play with the calculator and for a Scirocco R @ $50k over 5 years, 10,000km a year with a 25% balloon it looks like this:

My estimated savings are a shade under $3k a year vs doing it privately (according to my lease companies calculator).


To check the impact of lower interest rates I tried to replicate the same sort of situation with ANZ's Secured Car Loan Calculator:
Secured car loan repayment calculator - Car finance calculator | ANZ

Then put in 10% interest then 3% interest to see how much you would save if you could get a great interest rate privately... this 7% differential works out to be ~$200 month (or about $2,400 a year).


So while it's not entirely in-depth, to get a similar level of savings to a lease I need to get an brilliant interest rate. Add to that any extra KM's save more money again. (FYI upping the KM to 20,000 makes the leased savings estimate almost $5k pa)

The downside is the lack of flexibility, ie your stuck with the car for however many years you choose AND (usually) have to pay out a residual at the end.

[brad]

My lease was through Maxxia & they sourced finance through Maquarie. They refused to reveal the interest rate at the time (2008 - 2011) but it was about 18% when I could have got a normal car loan for about 12%.

WRT saving money, I don't think there was much difference overall.

[Ideo]

My lease was through Maxxia & they sourced finance through Maquarie. They refused to reveal the interest rate at the time (2008 - 2011) but it was about 18% when I could have got a normal car loan for about 12%.

WRT saving money, I don't think there was much difference overall.

It's more about managing cashflow than money IMO