Salary Packaging, Novated Leases & Toyota Finance

[exceladdict]

Hi All

Strongly considering a novated lease as my current employer is eligible for an FBT rebate and as such, the numbers appear to add up in my favour.

Wondering if anyone has any positive or negative tales about salary packaging vehicles, novated leasing, toyota fleet management or toyota finance australia.

Quite interested in the impact of a car loan from Toyota Finance (seem to be a large body and a member of ARCA) on credit reports too. Unsure if it falls in to the negatives for "reputation of credit provider" such as payday lenders.

Any advice greatly appreciated.

 

[Dr Ralph]

My partner and I have each salary packaged a vehicle from different employers for around the last decade. It's an outstanding way to reduce your taxable income. To make it worthwhile you need to get a new vehicle around every 3 yrs.

 

[andye]

I've used novated leasing for last 6 years with terms between 1 and 2 years. Works for me on a 16K km/yr (with only 3k business)-it wouldn't if I had a higher proportion of business miles. It is worth going through the numbers carefully as the effective loan rate may be higher than you can source elsewhere even allowing for the tax advantages.
The hit to my Veda score (with RACV/EPAC as lender) is about the same as a CC application.
I haven't found I've been able to trade-in for higher than the residual value although you almost certainly could if you go for a private sale.
I've tended to not use the fuel card and request reimbursement so I can get points; I'm not sure that all providers let you do this

 

[Princess Fiona]

I have been using fully maintained novated leases for the past 5 years.
Really like the convenience.
Not had a Toyota so can't comment on that.

 

[zainman]

Can people recommend a Novated lease company or share their experiences with their current provider? Also perhaps what cars they are using? I am also currently looking into getting one..

 

[Dr Ralph]

Can people recommend a Novated lease company or share their experiences with their current provider?

Often you don't have a choice. That is, you're locked into the one your employer selects for you.

Mine is nlc.com.au They're fine.

 

[Dr Ralph]

I haven't found I've been able to trade-in for higher than the residual value although you almost certainly could if you go for a private sale.

Between my partner and myself we've had 10 vehicles in the last decade. We've always met the residual via the trade in price and usually exceed it. The best we did was $5000 back in our pockets for a Subaru XV we leased for just under 2 yrs. The worst we did (break even) was with a bottom of the line Mazda 3 we had for 3 years. We learned our lesson.

 

[Dr Ralph]

Also perhaps what cars they are using? I am also currently looking into getting one..

The choice of car is a personal one. It isn't related to a novated lease itself. But you will get better value from the package if you go for a top of the line model. [Not forgetting about the luxury vehicle limits]

 

[knasty]

Often you don't have a choice. That is, you're locked into the one your employer selects for you.

Mine is nlc.com.au They're fine.

Indeed my employer also chose NLC. The main learning experience for me was around rates and disclosure. The standard rates tend to be very high and they are undisclosed ie. They quote an all in lease cost including interest and depreciation, then all the other items eg fuel insurance etc separately so unless you ask (and then negotiate) you can be paying a lot. Also don't believe the savings they quote vs buying in cash - they are comparing at the same interest rate as they charge you which, in my case, is vastly higher than funding from my mortgage offset account. That said it still makes sense for me to package 2 vehicles after negotiation on the rates.

 

[exceladdict]

It is worth going through the numbers carefully as the effective loan rate may be higher than you can source elsewhere even allowing for the tax advantages.

My employer offers two, one is selectus, the other Toyota fleet management. In reverse engineering the selectus quote, who would not disclose their rate, I found it to be approximately double TFM (over 10% PA).

Thanks to everyone for the advice.

 

[JessicaTam]

I have been happy with my 3 novated leases. The trick(!) is to choose a car that will not plummet in value the minute you drive it out of the showroom. That way when it comes to selling it you end up with the surplus from the sale.

 

[zainman]

I have been happy with my 3 novated leases. The trick(!) is to choose a car that will not plummet in value the minute you drive it out of the showroom. That way when it comes to selling it you end up with the surplus from the sale.

Any recommendations for makes/models that hold their value better than others or personal experience with a model?

 

[exceladdict]

Any recommendations for makes/models that hold their value better than others or personal experience with a model?

Just search your favourite second hand car website for a 3 year old version of the cars you're considering

Generally a premium brand, rather than the premium version of a cheap brand, holds more (ie a cheap European vs an expensive Hyundai)

 

[knasty]

What excel addict said. Depreciation can be your friend. If I want a car which holds its value I buy new. If I want a car with horrible depreciation I buy a few years old so someone else feels the pain. Second hand cars are fine for salary packaging (note there can be age limits) but if you want the gst benefit on purchasing the purchase must be from a gst registered seller with tax invoice.

Top of the line German cars often have horrendous depreciation, so can be a good used buy especially as your maintenance costs are tax deductible.

 

[Dr Ralph]

Any recommendations for makes/models that hold their value better than others or personal experience with a model?

Try Car Prices - Car Research - Search Car Prices & Values Online - RedBook.com.au and/or your state based motoring organisation - they usually keep a list of this information.

From my experience I've had biggest success with Toyota and Subaru. Least success with Holden and Ford.

 

[JessicaTam]

Try Car Prices - Car Research - Search Car Prices & Values Online - RedBook.com.au and/or your state based motoring organisation - they usually keep a list of this information.

From my experience I've had biggest success with Toyota and Subaru. Least success with Holden and Ford.

I have had two Subarus which have sold for more than the residual. I am currently driving a Pajero I bought second hand (from a dealer) and still have a couple of years to go. I should still be ok.

 

[smckay]

Like everyone else has said, choose your car very carefully. The residual will kill you if you choose poorly and do not look after the car.

Have a look at the value of the model you are thinking of, at the age now you intend to lease for. Divide the current price by the original purchase price and you have your residual. Of course, lots of fine print with that model but will get you going.

Don't buy a disposable car (cheap and nasty) and don't buy a car that is not selling (large family sedans).

Once you have the car, look after and love it as a nice clean, well presented car will get you maximum $$ at trade in or sale. And don't buy a fashion colour like puce green, you may like having the only one in that colour but there's a reason for that.

Research the market and see what is doing with what you want to buy.

With the FMO ask them what their labour rates are for servicing and if you are able to get the capped service costs. You are paying for this so it's in your interest to check the costs and what you are paying.

 

[k_sheep]

Is there a particular income at which point it is worthwhile doing this? I found it hard to figure it all out but it seems you're generally better off just buying outright?

 

[exceladdict]

Is there a particular income at which point it is worthwhile doing this? I found it hard to figure it all out but it seems you're generally better off just buying outright?

Depends largely on your employer. If they are eligible for an FBT rebate or exemption, the threshold for it to make tax sense is well under 100k.

 

[cove]

When you buy a new luxury import vehicle it is laden with dealer margin, GST, stamp duty and luxury car tax. If you get that same vehicle as a pre-owned it could be 50% of that on road cost at 2 years and 40,000 Kms.
If you have a house mortgage and personal debts your financial planner should have told you to drive the lowest cost vehicle that your ego will allow.