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Too lease or not too lease...

3K views 26 replies 14 participants last post by  YGOAMG 
#1 ·
Has anyone done this before?
 
#5 ·
Yes lease a car!
Its for personal use.
The monthly figure includes:
• Lease payments
• Fuel
• Insurance (full comprehensive, extended warranty, lease protection and gap cover)
• Servicing
• Registration
• New tyres
• Any non scheduled maintenance such as panel beating or car cleaning
and its about $900 a month for a $35k car with a residual of $8000.
 
#6 · (Edited)
This also interests me. I had leased a car many years ago.

At the end of this year I hope to move into a 2008 (or later) 335i. Pros and cons of leasing vs buying (with a personal loan as I do not have that sort of money, but I anticipate having a substantial income) would be appreciated.

I would appreciate advice on the best means of leasing. Car $65K-$80K. Residual and all the other factors are open to discussion.
 
#12 ·
My sentiments exactly but it looks so inviting!!
you could easily use $400 in fuel in a month ... are you sure its covering everything ??
Yes it covers everything. Its one of the benefits(salary packaging/lease) that the company i work has on offer. Spoken to a few boys at work who are doing it and they seem happy with it.
 
#11 ·
my 2c...
As someone who did lease (hire purchase to be precise) it was a great way of getting into a car i didn't have the cash for at the time, but knew i could afford... I have learnt a few things from the experience, have since paid off the full amount.
Borrowing the cash for a car is expensive, even if it is a fixed rate (mine was 7.95%), if you want to exit the lease early you will pay & i mean pay, these things don't amortise like a loan (or commonsense would have you believe) look up the rule of 72 if your interested. This might be a sticking point if your looking at exiting the lease or changing cars before the 5 years is up.
Personally i never plan to finance a car again, if i don't have the cash for it won't buy it. But it's an experience thing, i bought my car back in '06 at the age of 24, with some time and maturity you learn that you'd rather be making the 7.95% return on your cash and not be paying off a pesky loan. But at the end of the day it comes down to want vs. need.
 
#17 · (Edited)
:lmao: I love this guy!

The following is my 2 personal favorite extracts from the above E46 Financial Review
"Personally i never plan to finance a car again, if i don't have the cash for it won't buy it.'
"you learn that you'd rather be making the 7.95% return on your cash and not be paying off a pesky loan."
 
#14 ·
As others say, I guess it depends on the type of car and the amount of K's you intend on doing. If you are doing K's for work and don't take up this option, what are your alternatives? You may find your employer will give you an allowance.

Is the $900 repayment tax free?

I imagine there is also a limit to the amount of fuel / servicing etc. you can claim for personal use?

Is all servicing provided? E.g. If brake pads and rotors need replacing is it covered?

At the end of the day, you're paying 62k for a 35k car but you get a whole bunch of stuff on top. Having said that, unless your doing high K's 5 years of fuel, insurance and servicing might not equate to the 27k.

You also need to weigh up if you are in need of a new car. If you don't have a car and need a new one which you don't have cash for and were intending on getting a personal loan then the lease will look very attractive. If you have a car and don't need a new one then it may not be worth it.
 
#19 ·
Is this pre tax or post tax?
If it is pre tax you are well in front.

You need to verify min & max kilometres per year. There may be FBT implications.

5 years is a phucking long time for a car lease. Seriously consider a higher residual over 3 years.

$35k doesn't get much of a new car!? You haven't yet said whether you can buy 2nd hand.

Demo cars are much cheaper than new ones, if they have the spec you are looking for.

5 years! Bloody hell!

Graham
 
#24 ·
It is post tax according to my estimate i received. Yes u can buy 2nd hand cars as well. Yes 5 yrs is a long time!! I will get them to estimate me over 3 yrs as well.
Is it a lease or HP??
They are different
Its a lease!!
Also there are different types of Leases.

Personal Lease - Fully Maintained Novated Lease - Self Maintained Lease - Operating Lease .

I was a Leasing Consultant for the past 2 years for McMillan Shakespeare which is the Company responisble for Personal Novated Leases and also Operating leases for many companies and organisations in Australia such as Southern Health, NSW Police, WA Police, NSW Fire Brigade, Rail Corp, St Vincent's Hospital, Toshiba Australia, Kellog Brown & Root Company etc....

From experience, doing a Novated Lease (Using a portion of your Pre-Tax dollars) is only fiancially viable if:

1. You choose a Lease term for which you know that you are willing to have the same vehicle for that length of time. (As stated above, it's not easy to exit a lease before the Tenure end date)

2. The more Annual Kilomtres you drive, the lower your Fringe Benefits tax will be meaning the more Tax dollars you can save. However the more you Kilometres you drive also means the lower the value of your vehicle at the end of your Lease term.

3. It's much more viable and better of if you're in the higher Tax bracket from $80k+ (Paying a lot more tax)

4. Never expect to get a lot of cash back when you sell your vehicle at the end of your lease term, as you will have a residual percentage owing at the end of the lease therefore you need to keep in mind is the estimated re-sale value of the vehicle when the Lease term is up + the estimated Odometer reading on the vehicle when the Lease term is up..

Last but not least, be careful with the figures you are provided:

Rodsfromday: You said $900 per month right?

That's $10,800 Annually.
That's $54,000 Over the length of the Lease.
Plus your residual of $8,000.
Total $62,000 payable for the costs of a $35,000 Vehicle.
$62,000 - $35,000 + Interest rates etc.. = $27,000 approx for running costs.

The big question for you now is, do you really think you'll be spending $20,000 - $27,000 on running costs/expenses for this particular vehicle ?

Oh and when you get figures, try and get them itemised so you know exactly how much is going towards the vehicle payments so that you can calculate what the interest rates are. A lot of Leasing companies out there try to be discreet regarding interest rates (believe it or not) The amount of car's and leases I used to organised without ahving to verbally explain the interest rates is unimaginable. (Of course interest rates are all within the contract that they sign though)

:D
Yip its a novated lease. I might have another chat with the consultant. I gave a rough estimate of about 10K kms a year. Last year i only did 3K but now i do a bit more travelling to work.
Yeah $62K sure is alotta $$ for a 5 yr old car. Maybe set my sights on a newer car still within that price range.
 
#21 · (Edited)
Also there are different types of Leases.

Personal Lease - Fully Maintained Novated Lease - Self Maintained Lease - Operating Lease .

I was a Leasing Consultant for the past 2 years for McMillan Shakespeare which is the Company responisble for Personal Novated Leases and also Operating leases for many companies and organisations in Australia such as Southern Health, NSW Police, WA Police, NSW Fire Brigade, Rail Corp, St Vincent's Hospital, Toshiba Australia, Kellog Brown & Root Company etc....

From experience, doing a Novated Lease (Using a portion of your Pre-Tax dollars) is only fiancially viable if:

1. You choose a Lease term for which you know that you are willing to have the same vehicle for that length of time. (As stated above, it's not easy to exit a lease before the Tenure end date)

2. The more Annual Kilomtres you drive, the lower your Fringe Benefits tax will be meaning the more Tax dollars you can save. However the more you Kilometres you drive also means the lower the value of your vehicle at the end of your Lease term.

3. It's much more viable and better of if you're in the higher Tax bracket from $80k+ (Paying a lot more tax)

4. Never expect to get a lot of cash back when you sell your vehicle at the end of your lease term, as you will have a residual percentage owing at the end of the lease therefore you need to keep in mind is the estimated re-sale value of the vehicle when the Lease term is up + the estimated Odometer reading on the vehicle when the Lease term is up..

Last but not least, be careful with the figures you are provided:

Rodsfromday: You said $900 per month right?

That's $10,800 Annually.
That's $54,000 Over the length of the Lease.
Plus your residual of $8,000.
Total $62,000 payable for the costs of a $35,000 Vehicle.
$62,000 - $35,000 + Interest rates etc.. = $27,000 approx for running costs.

The big question for you now is, do you really think you'll be spending $20,000 - $27,000 on running costs/expenses for this particular vehicle ?

Oh and when you get figures, try and get them itemised so you know exactly how much is going towards the vehicle payments so that you can calculate what the interest rates are. A lot of Leasing companies out there try to be discreet regarding interest rates (believe it or not) The amount of car's and leases I used to organised without ahving to verbally explain the interest rates is unimaginable. (Of course interest rates are all within the contract that they sign though)

:D
 
#23 · (Edited)
Absolutely Correct, so if you actually drive the car @ 20,000 Km's per year for example - that's 100,000km's over 5 years racked up on the ODO..
And of course from a business perspective, Leasing companies do tend to underestimate running costs figures..
(Makes the fortnightly/monthly payments look cheaper/attractive without the company losing out on their own benefit (interest + management fees)
It come's down to each individuals circumstances.. Some surely can benefit - Some don't.
 
#25 ·
Looking at the full cost of lease ....purchase price+interest+running costs is not really fair. No matter how you bought the car or what you paid for it you will always have running costs.

But, I agree it does add up to a lot of money. From what I understand, leasing really becomes viable if you are in a very high tax bracket (45%)

Can you also claim depreciation on the car?
 
#26 ·
IMO hire purchase is better if you have a company and want to claim depreciation etc. You can claim the GST up to the LCT on purchase and obviously depreciation up to that limit also. Just be careful if you plan to sell the car under this arrangement...speak to an accountant.

I personally don't think there is anything wrong with leasing cars. People say all sorts of things to about how bad it is etc but it is mighthy ironic that BMW finance is bursting at the seams from all the leases they are establishing
 
#27 ·
Looking at the full cost of lease ....purchase price+interest+running costs is not really fair. No matter how you bought the car or what you paid for it you will always have running costs.

But, I agree it does add up to a lot of money. From what I understand, leasing really becomes viable if you are in a very high tax bracket (45%)

Can you also claim depreciation on the car?
Not with a lease..
 
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