Toyota Novated Lease

[mcgowanshaun]

Hey All,

I was looking at getting a new car and a mate of mine suggested I take a Novated Lease through work. Not knowing exactly how it worked he put me on to a website called http://www.novatedleasedeals.com.au where essentially all the novated lease brokers in Australia advertise - some really good deals on there. I ended up getting a new Toyota for much less than I thought I would!

Anyway - have any of you considered or taken a novated lease? I think they are brilliant - would love to hear your thoughts.

[jps137]

Hey All,

I was looking at getting a new car and a mate of mine suggested I take a Novated Lease through work. Not knowing exactly how it worked he put me on to a website called http://www.novatedleasedeals.com.au where essentially all the novated lease brokers in Australia advertise - some really good deals on there. I ended up getting a new Toyota for much less than I thought I would!

Anyway - have any of you considered or taken a novated lease? I think they are brilliant - would love to hear your thoughts.

I currently have my Corolla on Novated Lease and yes they can work out quite a good deal. However they are not for everyone, it depends on two significant factors

1) how many km you will do per year

2) your income level (and therefore your tax bracket)

and it is important to get independent financial advice on this

a further downside is that they usually only apply for late model cars (such that by the end of the lease period (1 to 5 years) the vehicle must be no older than 7 years (or up to 10 with some companies), this was disappointing for me as it ruled out a late 90's Twin Turbo Supra or even the 2.0L MR2

By the way what model Toyota did you get (your piece sounds suspiciously like a plug)?

Edited October 29, 2008 by jps137

[Kevsta]

Make sure you read up on how FBT is calculated on novated lease cars as these can be a real killer. If I recall, you need to drive at least 25,000 kilometres a year to be in the lowest bracket of FBT.

[CHA54]

I haven't checked the brackets for many years now, but when I had my work car on a novated lease in 1998, 40K a year was the figure to aim for to make it most cost effective.

We use Novalease at work for those who want to lease their work vehicles, the employee's that dont get a car allowance can salary sacrifice a lease too. I prefer to own my vehicle and claim it back on tax.

They have a calculator here: http://www.smb.com.au/NovatedLeaseVehicles...Calculator.aspx but like mentioned above you should seek financial advise on your particular situation.

Make sure you read the full page here: http://www.smb.com.au/FeaturesAndBenefits/Fbt.aspx

Edited October 30, 2008 by rollamods

[jps137]

I currently have my Corolla on Novated Lease and yes they can work out quite a good deal. However they are not for everyone, it depends on two significant factors

1) how many km you will do per year

2) your income level (and therefore your tax bracket)

and it is important to get independent financial advice on this

a further downside is that they usually only apply for late model cars (such that by the end of the lease period (1 to 5 years) the vehicle must be no older than 7 years (or up to 10 with some companies), this was disappointing for me as it ruled out a late 90's Twin Turbo Supra or even the 2.0L MR2

By the way what model Toyota did you get (your piece sounds suspiciously like a plug)?

Just to elaborate further:-

Novated Lease is paid each pay period out of pre tax income and the lease fee has three components

1) Finance of vehicle dependent on value of vehicle, the interest rate charged by the financier and term chosen (1-5 years, though 2-4 years is more likely)

2) Operating cost At the start of each FBT year (1st April to 31st March) one forecasts how many kilometers they will do in the year and therefore likely costs of fuel, registration, insurance, servicing and tyres this is then divided by 12 and that amount is charged each month. As well as coming out of pre tax income the benefit can be discounts on fuel, tyres and servicing

3) FBT as stated by a few others above the % charged is dependent on kilometers traveled in the year

up to 15,000km =26%

15,000 to 25,000 = 20%

25,000 to 40,000 = 11%

Over 40,000 =7%

Assume you have a $30,000 car (ex on roads) and you only do 20,000km your FBT charge would be approximately $6,000 (NB the formula is a bit more complicated and will give a marginaly differnt result but this approximation is sufficient for a preliminary can I afford).

As rollamods mentioned there are numerous calculators out there (it is important to check there assumptions given the current price of fuel), they will give you a better indicator

The above is intended as a guide only and does not constitute financial advice, individual situations will lead to different results. You should seek independent financial advice as to whether this product would suit you and your specific financial needs.

Edited October 30, 2008 by jps137