Novated leasing -tips; residuals
  • Register
  • Help
Results 1 to 15 of 15
  1. #1
    1000+ Posts Bruce H's Avatar
    Join Date
    Apr 2001
    Location
    Brisbane
    Posts
    1,211

    Default Novated leasing -tips; residuals

    Hi all
    Considering the novated lease option on a new Cit, but never looked at it seriously before as I do few annual k's (10000 max).
    Any tips on any pitfalls / what I should be considering? Any obvious benefits / disadvantages in a 3 year or 4 year term?

    Advertisement


    I have one quote that has a 35% residual after 4 years - seems a bit high to me - is this normally negotiable at beginning of lease?

    Thanks
    Bruce H

    Now 99 Xantia SX x2; 96 Xantia SX; 76 GS Club Estate x2; 76 GS Club; 74 GS Club; 88 VW T3 Reimo
    Before: AX Gti; BX 19TRi Estate; CX 2200 Super & Pallas; CX2400 Pallas; CX 2400ie Prestige auto; DS3 DStyle; GS Pallas; GSA Club; Xantia Image Estate; Xantia Exclusive; Xsara VTR R4; 1.4 Special Estate; Virage; R16TS

    Contact for the Australian Citroen GS GSA and Birotor Register http://australiancitroengsgsaandbiro...com/index.html

  2. #2
    UFO
    UFO is offline
    CitroŽn Tragic UFO's Avatar
    Join Date
    Aug 2001
    Location
    Gerringong, NSW, Australia
    Posts
    9,721

    Default

    Bruce I think if you are doing ~10k km per year then it is not worth it. Most plans work best if you can get at least into the 15 to 25k km range. However, many of them do allow you to lease a reasonably newish 2nd hand car too, so that may be a better option.

    We have done ~ 18500km per year for the two years we have now had the C5. That includes frequent trips to Cooma to see aged parents and of course trips to Cit In!
    Craig K
    2009 C5 HDi Exclusive

  3. #3
    Fellow Frogger! Ronhic's Avatar
    Join Date
    Nov 2010
    Location
    Canberra
    Posts
    450

    Default

    Craig is correct about the mileage - less than 15000 is not normally feasible, bu it would be worthwhile talking to any contact you need to.....

    ...and he's also correct about late model used cars....

    ...but it does depend on the financier...

    As a case in point, we recently did a 'sale and lease-back' on our 2008 Holden Viva wagon....we'd paid the car off in under 12 months and thought 'hang on, we could use that money in other ways'....so got a cheque back from the finance company for the guide price and now have the benefits of fuel cards and servicing sorted....

  4. #4
    Fellow Frogger! rmac's Avatar
    Join Date
    Oct 2010
    Location
    Denmark, Western Aust.
    Posts
    750

    Default

    It has been some time since I had a vehicle on a novated lease but mileage is something to be very careful with. In my case I came in a few hundred kilometres under the band used to calculate the fringe benefits tax - it meant I got a bill for over FOUR THOUSAND dollars!
    !!!

    The fringe benefits tax is calculated on your distance travelled. As this is taken out during the year you need to nominate your expected distance for the year. The 'band' is then applied to your tax component of the package (along with fuels, servicing, lease payments, rego etc) and if it is not met you have to find the difference. The lower the distance travelled (in the band system) the higher the tax. I can't remember the bands but over 20,000km AFAIKR was at a lower tax rate than below it.

    Unless they have altered the tax rates a distance of 10,000km per year would be heavily taxed and make the novated lease most unattractive.

    My first novated lease was the best I had. My actual running costs were much lower than the formula applied which meant I accumulated thousands of dollars in my salary packaging account over the four years. This money is pre-tax so at the end of the lease I made additional 'lease' pre-payments equal to the residual - which you could do then. So the car was paid for by me, in pre-tax dollars. Since that time they altered the rules to only enable you to make lease payments as they were due. ie you couldn't pre-pay any lease payment.
    Current Cars
    Australia's 2016 C5 2.0HDi Last
    2011 C5 2.0HDi Comfort
    1973 Citroen D Super 5,
    1981 Citroen CX 2400 Pallas C-matic,
    1981 Citroen CX 2400ie Super Familiale C-matic - Raid Arctique 2014
    1991 Mazda E2200
    1924 Citroen 'la petit citron'

  5. #5
    Banned Haakon's Avatar
    Join Date
    May 2002
    Location
    canberra...
    Posts
    8,769

    Default

    Hopefully they close that dumb fringe benefits tax thingy - actually encouraging people to drive more is not exactly the brightest idea around!!

    I think at those kms the best advice is buy something outright with the least amount borrowed - put the income into super or something else and come out a long way ahead down the track.

    Cars are for the most part a waste of money, especially if its on borrowed funds. Don't lease a $40K Citroen - buy a $20K car and come out a hell of a lot more than $20K in front in a few years.

  6. #6
    Real cars have hydraulics DoubleChevron's Avatar
    Join Date
    May 2000
    Location
    Ballarat,Vic,Aust.
    Posts
    16,426

    Default

    Nah ...

    getcha self something decent again.... If you buy a C4 you'll blow about $20,000 in the first two years of ownership..... Or you could probably have this registered here for maybe $12,000 ...... and after 2years of pleasureable driving of something decent ....... It'll be worth $15,000

    http://classiccarsales.ie/buy/view/C..._PRESTIGE/1159

    Go for it !!!

    I'm tempted by this ... but I'm probably a little biased

    http://classiccarsales.ie/buy/view/C...i_Turbo_2/1375

    seeya,
    Shane L.
    'Cit' homepage:
    Citroen Workshop
    Proper cars--
    '85 Series II CX2500 GTi Turbo I
    '63 ID19 http://www.aussiefrogs.com/forum/citro%EBn-forum/90325-best-project-car-you-have-ever-seen.html
    '72 DS21 ie 5spd pallas (last looked at ... about 15years ago)
    '78 GS1220 pallas
    '92 Range Rover Classic ... 5spd manual.

    Yay ... No Slugomatics


    Modern Junk:
    '07 Poogoe 407 HDi 6spd manual

  7. #7
    1000+ Posts Bruce H's Avatar
    Join Date
    Apr 2001
    Location
    Brisbane
    Posts
    1,211

    Default

    Shane:
    1 - I don't buy red cars

    2 - Would you seriously want to park either of these cars in the sun all day in a high school carpark? (the cotton car cover is only of use on those days when rain is not predicted.) Think of the steering wheel; the door trims; the seat tops; the metallic paint; that vinyl roof..................... never mind the dents from the errant stones from lawn-mowers; students' bags; footballs....................

    3 - the Xsara has lasted 10 years before it's worth nothing , and I no longer have to make quarterly visits to a mechanic .

    Others:
    Thanks for the advice - spent lunch doing all sorts of number crunching and think it's no go.
    Now just have to decide if it's opt for a C4 1.6auto or a DS3 Style.
    Last edited by Bruce H; 28th March 2011 at 04:55 PM. Reason: typo
    Bruce H

    Now 99 Xantia SX x2; 96 Xantia SX; 76 GS Club Estate x2; 76 GS Club; 74 GS Club; 88 VW T3 Reimo
    Before: AX Gti; BX 19TRi Estate; CX 2200 Super & Pallas; CX2400 Pallas; CX 2400ie Prestige auto; DS3 DStyle; GS Pallas; GSA Club; Xantia Image Estate; Xantia Exclusive; Xsara VTR R4; 1.4 Special Estate; Virage; R16TS

    Contact for the Australian Citroen GS GSA and Birotor Register http://australiancitroengsgsaandbiro...com/index.html

  8. #8
    Fellow Frogger! kimmo's Avatar
    Join Date
    Feb 2006
    Location
    Brisbane, QLD, Australia
    Posts
    515

    Default

    Quote Originally Posted by DoubleChevron View Post
    Nah ...

    getcha self something decent again.... If you buy a C4 you'll blow about $20,000 in the first two years of ownership..... Or you could probably have this registered here for maybe $12,000 ...... and after 2years of pleasureable driving of something decent ....... It'll be worth $15,000

    http://classiccarsales.ie/buy/view/C..._PRESTIGE/1159


    seeya,
    Shane L.
    Nah, that Prestige has got the chrome bits missing from the rear bumper and looks like the chrome around the headlights is missing
    Wait a minute... just like mine does.
    C5 Touring 2008, CX 2400ie Prestige '81 (with dead gerbox), CX 2400 Pallas C-Matic '80, CX2400 Super Familiale C-Matic '79 (to be scrapped very soon) , CX2400i Familiale 5-spd (to be scrapped), GS 1220 Wagon '78 (next project), ID19 '64
    CX Register

  9. #9
    Real cars have hydraulics DoubleChevron's Avatar
    Join Date
    May 2000
    Location
    Ballarat,Vic,Aust.
    Posts
    16,426

    Default

    The turbo is missing it's stainless trim from the bumpers too..... Interestingly it doesn't have holes to mount the trim, so possibly the later turbos were sold "trimless".

    Red colour is best ............................. It's the fastest you know .... And, and, and .... it looks the best!! (no I'm not biased ).

    seeya,
    Shane L.
    'Cit' homepage:
    Citroen Workshop
    Proper cars--
    '85 Series II CX2500 GTi Turbo I
    '63 ID19 http://www.aussiefrogs.com/forum/showthread.php?t=90325
    '72 DS21 ie 5spd pallas (last looked at ... about 15years ago)
    '78 GS1220 pallas
    '92 Range Rover Classic ... 5spd manual.

    Yay ... No Slugomatics


    Modern Junk:
    '07 Poogoe 407 HDi 6spd manual

  10. #10
    Fellow Frogger! kimmo's Avatar
    Join Date
    Feb 2006
    Location
    Brisbane, QLD, Australia
    Posts
    515

    Default

    That turbo is far too shiny and nice looking, I just could not drive such a car - especially anywhere near high-school car park
    Little bit battered examples are better.
    C5 Touring 2008, CX 2400ie Prestige '81 (with dead gerbox), CX 2400 Pallas C-Matic '80, CX2400 Super Familiale C-Matic '79 (to be scrapped very soon) , CX2400i Familiale 5-spd (to be scrapped), GS 1220 Wagon '78 (next project), ID19 '64
    CX Register

  11. #11
    Fellow Frogger!
    Join Date
    Nov 2010
    Location
    Greensborough, Victoria
    Posts
    359

    Default

    Regarding leasing it's been years since I looked at this but last time I did you needed to be doing 40,000km a year to get into the lowest FBT tax rate. The FBT rates on lower annual distances were IMHO killers.

    BUT another approach perhaps not for the OP would be to run something classic, cheap and cheerful like a Cit GS or CX say under $5k and preferably more like $3k as a company car. Then you could theoretically expend tax free dollars on maintenance if you were self employed and because they are not worth much the FBT even at low annual distance covered would be low.

    Shane in Belfast and England in May/Jun... have looked at the Irish website a few times. I could drive either one of these to the docks for you. They'd both qualify for the pre 1988 import rule. Or we could do a Citi-share Cit timeshare.

    Regards
    John

  12. #12
    Fellow Frogger
    Join Date
    Jan 2004
    Location
    Sydney
    Posts
    9,777

    Default

    Although you might get a leg up from the ATO if you package it appropriately (and remember the kms / statutory method is simple, but not the only way to assess FBT), you still have to pay for the car one way or another and be able to keep paying for it if you leave your job. The way I've always looked at it is that people buying a salary packaged car they would not consider owning otherwise may be costing themselves real money having something they probably didn't really want or need. If your work situation is entirely stable and you were in the market for a particular sort of car and packaging it make ownership possible, fine, but if not, then maybe take the cash or even sacrifice it into super instead.

    Edit: Want a new C4? There's a special on 1.6 petrols that may appeal.
    http://www.citroen.com.au/default.as...rticle&ID=1029
    Last edited by David S; 28th March 2011 at 11:51 PM.

  13. #13
    Too many posts! JohnW's Avatar
    Join Date
    Jul 2001
    Location
    Perth, WA, Australia
    Posts
    10,813

    Default

    Quote Originally Posted by Bruce H View Post
    Hi all
    Considering the novated lease option on a new Cit, but never looked at it seriously before as I do few annual k's (10000 max).
    Any tips on any pitfalls / what I should be considering? Any obvious benefits / disadvantages in a 3 year or 4 year term?

    I have one quote that has a 35% residual after 4 years - seems a bit high to me - is this normally negotiable at beginning of lease?

    Thanks
    People I know have struggled to make novated leases work financially unless they are doing huge distances annually.

    I decided years ago to buy the 306 instead. We still have it 16 years later and are many $$$$ ahead.

    Cheers
    JohnW

    Renault 4CV 1951
    Renault R8 1965
    Renault Scenic 2005 (wife's)
    Renault Scenic 2007 (mine)
    Renault Scenic 2006 (daughter's)
    CitroŽn CX Pallas 1980

    National Co-ordinator, Renault 4CV Register of Australia

  14. #14
    sans witticism SLC206's Avatar
    Join Date
    Sep 2003
    Location
    North Parramatta
    Posts
    3,997

    Default

    The rules have changed a bit since the days where you had to do 25,000km/year or more to make it feasible (ie. 11% FBT bracket).

    Now that there is a Employee Contribution method (ie. you pay the FBT with your own post-tax money) it can now benefit people who do far less km in a 12mth period or who are not in the top tax bracket (which $180,001 pa these days!).

    The thing to remember is Novated Leasing should be compared to borrowing the money in other ways (ie. a personal loan), not just in comparison to buying a car with cash.

    There are plenty of calculators online - try one: Sample Calculator

    Oh, and the residual value is set by the ATO, based on what it thinks is the effective life of a motor vehicle (8 years) and how many years you lease the car:
    1. 65.63%
    2. 56.25%
    3. 46.88%
    4. 37.50%
    5. 28.13%


    The lower the residual, compared with how much you think it will be actually worth at the end, can be a benefit (or a curse). There are also novated leases where you just hand the car back at the end.

    Lots of homework (and the use of an accountant) is recommended.
    Regards,

    Simon

    2018 308 GTi 2011 DS3 DSport
    ----
    2014 208 GTi 2007 207 GTi 2004 206 GTi180 2000 206 GTi 1995 306 XT

    www.peugeotclub.asn.au

  15. #15
    1000+ Posts Ken W's Avatar
    Join Date
    Sep 2002
    Location
    North Brisbane
    Posts
    1,928

    Default

    Bruce,

    Driving trips to Tasmania and back can help lots with the kilometer requirement.

    Cheers,

    Ken W

Thread Information

Users Browsing this Thread

There are currently 1 users browsing this thread. (0 members and 1 guests)

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •