HI!

In the next 2 - 3 months I need to purchase a vehicle (wagon or 4x4) for work.

I already have a rough idea what I want but Im wondering if anyone else has leased a car before?

I have been told by friends and family that it is a better way to do it because you can claim a certain percentage of repayments back on tax.

Is this true if you are working for a company and not yourself, is it a better way to go blah blah blah.

Any experiances or advice would be muchly appreciated.

There's a gazillion variable on what is the best way to go.

If your job requires a vehicle, shouldn't your employer pay for one?

Not all employers offer vehicles unfortunatly. I knew that I would need one when I applied for the job and having accepted it I will need it soon enough.

I guess the same thing could be said about pizza delivery places, most of them require you to use your own car.

Considering I have found the IT market to be completly s*** and have been looking at getting a car anyway, I am not too concerned about it

i have looked into this quite extensively for myself, in particular a novated lease.
this is what i found:
1. Only do this if you need a new or near new car.
2. Only do this if you need to borrow the money for a car.

As i didn't meet either of those two 'conditions', i chose not to.
Basically from what i could find out, the 'lease' cost is essentially a poorly disguised finance charge at around 14.5-15.5% interest. Almost doubled what the depreciation would be on its own as a monthly breakdown. However the taxation benefits negated this finance charge quite well, so it was a bit like essentially getting an interest free loan for a car.

Straight out leases you can claim back on tax. But seriously....what do you do?

You can enter into a salary sacrificed novated lease contract with your employer which could save you money.

Serously consider getting into a lease. To claim the actual repayments of a lease on tax it needs to be a straight out lease (normally you have to give the car back). If it's a hire purchase arrangement you can only claim the depreciation and "interest component" back on tax.

Even then, it depends on what you do. Have you a logbook for your current car? is it like 70-80%?

I really can't be bothered getting into it. Go and see a proper accountant, we used to have clients go into "leases" and then come in and say they want to claim it. Often in the end it would be more tax effective for them to claim the cents per km model, than it would be to claim the 40% of the lease payments. (Not to mention the people that didn't know they couldn't claim the lease payments...and only the interest/depreciation)

Add up all the lease payments over the life of the loan....and work out how much it will cost you to buy outright. I seriously doubt you could find a better safe use for the money if you were to enter into the lease and use the money for something else....(unless you run a business)

Yeah, if you can salary sacrifice the lease payments leasing is much more attractive.

If you borrow money to buy a vehicle you need to consider:
1. The interest on the loan
2. The depreciation of the vehicle

If you use you own funds you need to consider:
1. The opportunity cost of the funds used (ie: what the money can do for you elsewhere)
2. The depreciation of the vehicle.

If you sign up for say a 3 year lease all you need to consider is:
1. Monthly payments

Working for a company that does offsite IT Support. Basically a glorified tech that does field support on network/server side, installs, maintainance etc etc, so mainly it will be for business use.

I dont currently keep a logbook but I know outside of work I wouldnt use it much unless going away (motorbike owner as well)

I will definatly seek out the advice of an accountant, I just wanted to see if there is any DONT f***ING DO IT! red flags before I pay someone for advice :)

Its interesting what you say tho because Iv only really seen a hire purchase and novated lease on google, not a "straight" lease.

Honestly I would like to keep it for 2 - 3 years, hand it back, get another vehicle if its possible to do that.

Mr hardware, unfortunatly I am in the conditions of 1 and 2, although the loan would be small, it would mean the sale of my bike which I am trying to avoid.

Well if you can claim the vast majority or all of it back on tax, then go for it, it's a bloody cheap way to get yourself into a new vehicle quick.

Yeah Mission said it much better! :)

Eds - lots of people do what you do, on a hire purchase and trade the car in, and roll over into a new hire purchase. Usually they lose a few k each time though.....

Just FYI, I have a friend who did IT support, and was in his car all day. So I got him to do a logbook, and he only got like 45-50% business use (can't include to and from work). And it worked out better to do cents per km. He got a personal loan for the 20k car, so was paying interest and claiming depreciation. That said he didn't have a bike, and did use it on weekends, and had 15min drive to work each day.

Honestly I would like to keep it for 2 - 3 years, hand it back, get another vehicle if its possible to do that.

To hand it back you would be looking at a Novated Operating Lease. You pay the one low* monthly sum and all running costs are covered, fuel maintenance etc. And you hand it back at the end of the nominated period. The lessor cops the depreciation and disposal of the vehicle.

Opposed to that is a Novated Financing Lease. The lease may still cover running costs etc but at the end of the period there will be a balloon payment to pay out the lease. Basically the vehicle becomes your responsibility and you have to cough up the balloon payment ie: sell the car, best choose a car that doesn't suffer horrible depreciation!



*may not be low

The hope would be if I could swing it would be a 2009 subaru forester which should hopefully hold its value.

So your saying that I could have a 50% residual on the car to reduce my payments now and use the cash later to purchase it out of the lease when the lease ends?

So your saying that I could have a 50% residual on the car to reduce my payments now and use the cash later to purchase it out of the lease when the lease ends?

Basically, yes. But as mentioned the residual is normally a bit higher than the value so you may have to cough up a bit to fill the gap.

Subaru's normally hold their value well so it would be a good choice.

last edited by mission at 21:52:53 27/Apr/09

Eds, if you want a subaru let me know.. I have a mate who is a subaru car salesman..

also have one who works at toyota and vw..

I definatly will! Probably wont start looking to purchase until after may at the moment but Ill hit you up!

Ty too all for your advice. Going to double check with an accountant and hopefully new car in a month or two!

also have one who works at toyota and vw..

get me a sportivo plz

whoop, if you are serious then pm me what you want..