Working out leasing costs

[Euroboost]

A 5 year lease would be fine in my case as my wife hates changing cars, and KIA has a 5 year warranty so I no give a fuck.
On the other hand, what happens if you suddenly find yourself looking for a new employer?

[MartyHusseinXF]

A 5 year lease would be fine in my case as my wife hates changing cars, and KIA has a 5 year warranty so I no give a fuck.
On the other hand, what happens if you suddenly find yourself looking for a new employer?

Generally then you have to pay the finance company directly and the running costs are your own responsibility.

[phat-turbo]

i think peoples emotions need to be taken out of the finance side of the things and it can certainly be difficult when the car is ready to go and the dealer is egging you on...

Euro: leasing is essentially "rent" ... why would you want to rent a vehicle for five years and still owe a residual at the end?? typically you'd have a five year loan with a 30% residual so based on a $30k car you're going to have an residual of $9k left over ... sure you may have saved a few bucks in the monthly payment but youve paid more interest and potentially have a car that isnt even worth $9k all because you wanted to save $25/wk ...

$30k @ 9.5% structured 60m @ 30% is approx $510
$30k @ 9.5% structured 36m @ 45% is approx $630

for the sake of $25/wk, i know which i'd rather, especially if its novated ...

[Captain_Slow]

five years is a fkn long time to own a car

Yeah but...two years in a Falcon, or five years in something nicer?

[phat-turbo]

I'd take two years in an Aurion over a Falcon

If you're so determined to have "something nicer" ... why not explore the possibility of a higher residual ?

five years, 30% residual on $75k = $1260/m or three years, 55% residual is $1395/m -- $30/wk more for two years less.... the generic stereotype is that if youre doing a 4-5yr novated lease, you're probably over commiting yourself and need to look at a cheaper vehicle

i think you'll find 45% depreciation is probably realistic after 3 years too (unless its a hsv/fpv) so you shouldnt be "up side down" as SPDRCR put it

[wiggah]

isn't it also that you are financing all your running costs that helps make a 5 year lease a bad proposition?

[phat-turbo]

it'd depend whether you were doing a fully maintained finance lease (ie: you take the residual value risk) or a fully maintained operating lease (ie: no risk to you at all) ... in the latter the finance company makes the residual as low as possibly thus the payment goes up... the other thing to consider though is what jizz mentioned... the longer you keep the car, the more expensive services become and replacement tyres become more frequent...

i have two lease, one over 24 months the other 30 months.... theyre both maintained operating leases and i think its fantastic (of course im bias)... my old man has a fully maintained finance lease on an audi a4 .. he chose five year term and its the worse thing he has ever done... wants to change vehicles and cant justify the "hurt money" by trading out of it.. the biggest thing i find with being locked in is that things change in life and unfortunately a lease just isnt flexible so expect to get raped if something unexpected happens to you and you need to break the lease

[IMOA]

It's also important to note that with the maintained leases you're not "financing" the maintenance costs, the only pieces that are financed are the vehicle and on road costs. The maintenance costs are simply spread out evenly over the life of the lease, there's no interest charges on them.

[Merry Vanly Stan]

Yeah but...two years in a Falcon, or five years in something nicer?

i'd rather take two years in something nicer..

im guessing you have a five year lease on your commodore??

[wiggah]

It's also important to note that with the maintained leases you're not "financing" the maintenance costs, the only pieces that are financed are the vehicle and on road costs. The maintenance costs are simply spread out evenly over the life of the lease, there's no interest charges on them.

at some point in time wouldn't they effectively then be lending you money for free? (until such time as what you've paid catches up with what has been spent on tyres, servicing, fuel etc)

[phat-turbo]

nah, they work the package out at say $20k/pa ... so they take $20k pre-tax out of your salary divided by your pay cycle (weekly/fortnightly/monthly etc) and its typically broken up like so:

- $850/monthly instalment (paid to finance company by employer)

- $350/m for fuel (typically your leasing company gives you a fuel card which is paid on account which your employer will pay, typically this is in arrears so you'll effectively have cash in the kitty to already accommodate your fuel expenditure)
-$300 fbt liability

-$200 tyres/servicing (typically accrues as you wouldnt normally need a service for at least six months and tyres are usually 12-18 months down the track unless youre rorge)

so by the time it comes for tyres or a service you've already got money sitting in the kitty, the employer receives the bill from the leasing company and just pay it and continue to take the money out of your pay.. basically a novated lease is a three way agreement... between you, the employer and finance/leasing company... youre ultimately responsible for the debt but even if you were to get in a situation where you were obtaining "free" money, it would only be from the employer who would more than likely help themselves to your pay or recoup via benefits (accrued rdos/annual leave etc)

[IMOA]

It really depends on how it's structured, they can be set up as either budgets (typical for novated finance) or fixed cost (typical for op leases). If it's a budget then you're just putting money into a bucket, pulling out of that bucket when expenses are incurred and then the difference is settled periodically (typically in aus at end of lease). If it looks like there will be a big shortfall at the end of the lease they'll usually bump the payment up.

For the fixed cost it's more akin to insurance, you make the monthly payment and they pay the expenses, the difference between the two is simply an expense or income to the leasing company.

So interest would only come into play for a budgeted product and for the sums of money involved and the fact sometimes you'll be ahead and sometimes behind but neither can be predicted there's no cost effective way to try to charge interest.

[Captain_Slow]

i'd rather take two years in something nicer..

im guessing you have a five year lease on your commodore??

No, I own the Commodore outright. Couldn't make the figures on a lease stack up in my favour, so I didn't do it.

(Fair to say I find this type of finance a bit of a black art...I work with words, not figures).

[Merry Vanly Stan]

that's claiming milage, not depreciation??

[Merry Vanly Stan]

yeah, but you cant claim depreciation??