Is A Novated Lease Right For You?

Some of you might think that a novated lease just isn’t for you. You might think that your boss is never going to agree to it, or that novated leases are only for those on super-high salaries. Or else it applies to people who have to drive interstate all the time who qualify for novated leases. You’re only here at this site to find out more about getting a personal car loan.

Well, while we can’t do much about an unwilling boss, we can help you learn more about novated leases. You might be in for a very pleasant surprise. It could be that you would benefit from a novated lease and you might be able to novate your car after all.

Try our quick quiz to see if you are likely to benefit from a novated lease or from novating the car you already have.

  1. Do you use a car? If you answer no to this question because you work from home nearly all the time or because you prefer to use public transport and/or bikes, then a novated lease isn’t for you  unless you fancy trying to persuade the bean-counters at work that you need a novated lease on a top-notch bike. If the answer is yes, then you are likely to benefit from a novated lease.
  2. Do you need a car loan? Well, if you don’t need to borrow money to buy a car, it could be asked what you’re doing at a car financing site (OK  I get it: you’re after finance for some business equipment!). If you do need to borrow money to get your next car (and most of us do), then a novated lease will probably work for you.
  3. Do you still have money to pay off on your current car? You might be visiting this site because you need a second car. But you can also make a novated lease work for the car you already have, assuming that you’ve still got a bit to pay back on your car. With a sale and lease back agreement, you get the salary packaging benefits of a novated lease and also get the equity you already hold in the car back in the form of cold, hard cash (hmmm  I can think of a few things I could do with that money!)
  4. Do you use your car mostly for private purposes? And just to clarify things, the tax people consider driving to work in the morning and back again at night. And (go on  admit it!) most of us run a few errands on the way to and from work, such as dropping the kids off at school and picking up a bottle of milk and a loaf of bread from the(However, if you’re a contractor or a sales rep who has to keep a driving logbook and uses the car for work-related purposes most of the time, then a novated lease might not be the best option for you).
  5. Does your employer do the salary packaging thing? If they don’t, well, obviously, you won’t be able to get a novated lease unless you’ve very, very good at persuasion. If you employer does, then you should be all good.

If you answered yes to all these questions, then you are likely to find that a novated lease will work for you.

Got The Loan? What Comes Next?

It won’t be long, hopefully, until you have managed to find the financing package that suits you and your lifestyle best so you can get that set of wheels. It could be a personal loan or it could even be a novated lease system. But once you have got the car sitting in your garage and a debt to pay off, what come next?

Obviously, you’re going to pay the loan off. The weekly, fortnightly or monthly repayments are the standard way to do this, and this is something you need to talk about to us when you go about taking out a loan. These payments should be something that you can manage without too much of a squeeze. And if theyre monthly payments and you get paid monthly, its wise to schedule the date the payment goes through for the time of the month when the bank balance is looking a bit healthier rather than the skinnier end of the month. Otherwise, it’s baked beans time.

The sooner you can pay a loan off, the better, as this reduces the amount of interest that you end up paying. Some loans have a small penalty fee if you pay the loan off earlier to discourage you from doing this, but if you sit down for a bit with a calculator, you usually find out that this penalty fee is less than what you would have paid in interest anyway. Or do your homework beforehand and look for a loan that allows you to make large lump sum repayments or pay the lot off early.

Here are a handful of ideas to help you find a way to pay your car loan off earlier than the full term of the loan:

  • Make a tight temporary budget and see if you can cut a few corners off your other expenditure here and there so you can increase the amount of your repayments. Maybe you can postpone a holiday (or have a staycation checking out the attractions in your local area while you stay in your own house). Maybe you can have a temporary ban on retail therapy. Maybe you can buy clothes from second-hand shops. Maybe you can cook cheaper cuts of meat. Maybe you could Every bit you do to increase your regular payments will see that loan being paid off faster. You could even do this before you take out the loan, avoiding penalty fees.
  • Got a bit of surplus? Instead of blowing it on a shopping spree or putting it into a savings account, use the amount to pay a bit more of the loan off. The amount of interest you would have earned by putting it in the savings account is probably less than the interest you’ll not pay by whacking that loan down. A penny saved is a penny earned, and they can’t tax you on it, either.
  • Stay informed. Don’t just leave the loan amount sitting there and ignore it, apart from making the funds are there to meet the latest automatic payment. Know how much there is left to pay  it might be something that you can manage to pay off outright.

If you’re on the lookout for a new car and have seen an ad or an example of a machine you like, then you probably want to take out a personal car loan to buy one. However, when you’re in the process of shopping around, you may have noticed that not all cars with the same name are equal, and some are cheaper than others. What’s going on?

What’s going on is that manufacturers often make different variants within a model. This is a way of increasing their sales potential. Usually, there are three main variants. Here, we’re not talking about sedan versus station wagon variants, or short wheelbase versus long wheelbase, although this is another way that manufacturers create more variants and increase their market share. Equally common is the trend of having three variants with different levels of luxury.Usually, the differences are indicated by a set of letters and/or numbers or even a subspecies name attached onto the main name.

You have to be a wee bit informed to know which one is the luxury version and which one is the basic version (if basic is a word that you can actually use about new cars these days). Most of the differences are inside either under the bonnet or in the interior. Occasionally, the luxury variant has some exterior touches that make it look a bit different from the others. If you’re unsure, then have a look at the manufacturer’s website or brochures, or visit a good car review website like Private Fleet, which will let you know.

Now, if you are on the hunt for a new car, the difference between the variants usually means a difference in price. This means that if the weekly repayments for the high-end variant are beyond you, you may be able to afford the weekly repayments for the cheaper version, putting the make and model of car you like within your reach.

So what sorts of things usually make the difference between basic and luxury variants? Here are a handful of differences that you can expect:

  • The interior trim. The basic variants usually have a cloth finish while the luxury ones get leather or a better type of cloth.
  • Bells and whistles: The luxury ones usually have a few more gadgets and conveniences (e.g. electrically adjustable mirrors, cruise control, voice control) that the basic ones don’t. This is the biggie, and this is the main way that the luxury and the basic variants differ.
  • Sound system: While the basic model will have a sound system, it won’t have as many speakers or as powerful speakers as the posher version.
  • Engine: Often, the more powerful engine is only available in the luxury variant. The good news here is that the basic versions are often more frugal.

It’s slowly phasing out, but some marques have differences in the safety features as a way of making the basic model cheaper than the luxury version. This isn’t to say that the basic variants are unsafe but they can have fewer airbags and fewer active safety features. Do your homework. If safety is important to you and the luxury variant has the better safety level, you might have to scrimp and pinch a little more to save up the deposit for that one or to manage the weekly payments. And shop around for loans  you might be able to find one that you can manage, so talk to us.

Tips For Buying Privately

Once you have managed to get a car loan approved, it’s time to go shopping. You have a number of options, ranging from car brokers such as Private Fleet, car sale yards, auctioneer’s yards, online sales/auctions of the EBay type and private sales that get advertised via newspapers and signs on parked cars.

Buying privately does have some advantages. You’re not paying the dealer’s commission and you’re not paying for the mark up. You also don’t get high pressure from a professional salesperson and you don’t get leaned on to go with the loan provider that usually works with that particular car yard (these deals can sometimes be quite good but they might not be the best deals out there, so do your homework). However, it can have some pitfalls, as you don’t get the consumer protection that you get when buying through a car sales yard.

Here are a few handy hints for helping you get a good deal when buying privately.

  • Always inspect the car thoroughly before signing anything, clicking any Buy Now buttons or handing over any money.Even though a car might look great in the photos online or sitting on the side of the road, you want to start it up, check it inside and out and possibly subject it to a proper test from a mechanic. Some people do tell lies and Photoshop can cover over a multitude of sins.
  • Don’t inspect the in a park or anywhere apart from the owner’s. You may miss warning signs like big pools of oil on the driveway or in the garage.You also need to start the car from cold to see what it’s like to start and whether or not it belches blue smoke and sputters oil when it starts, and if you’re meeting away from where the car lives, it will have had a chance to warm up.
  • Be suspicious if the car doesn’t match the property you’re buying it from (e.g. a very shiny flash sports car in a seedy and run-down property). This could indicate a stolen car (those selling a car, take note!).
  • If the property has lots of other cars in various states of disrepair, get very suspicious or walk away.
  • Cars being sold privately by mechanics or panel beaters have red lights attached, metaphorically speaking (if it literally has a red light on the top, walk away immediately, as it’s an ambulance). If a mechanic/panel beater is selling a vehicle, it’s probably because the thing is held together with duct tape (literally, sometimes) and they want to get rid of the thing before it. Stay away from them unless you own a wrecker’s yard or want an old car for a children’s playground.
  • Be extra vigilant about getting a mechanic to check out a car that’s had cars that have been given after-market modifications such as lowering, fat tyres and sporty accessories, as this suggests that the car may have been driven hard and thrashed. They haven’t always been thrashed, but be on your guard.
  • Haggle. You are likely to be able to claw a bit off the price if the seller is moving overseas and/or is wealthy. Be open to compromise, especially if the seller offers to throw in a few extras (e.g. a full tank of petrol, the snow chains that fit that 4×4 but not their other car, a six-pack).

More tongue-in-cheek tips can be seen in this video clip.

A Cautionary Tale

Some people who are in the process of buying a new car might be a bit sceptical about the whole thing. They might be coming from the angle that you pay less if you can buy a car for cash and if you don’t have a whole lot of money saved up, you have to be content with buying yourself a more humble car rather than some flash new thing. Well, this idea does have some merit to it. It is certainly that the less you borrow, the less interest you’ll have to pay. And it is also true that if you aren’t rolling in bucks, you are wise not to buy the new flashest car in the sales yard.

But you can go too far in this direction. Sometimes, what you’ll pay in interest when repaying a personal car loan turns out to be less than what you can end up paying if you buy a car that’s too cheap and a bit dodgy. Here is a true cautionary tale that happened to someone this writer knows. Names of people and a few identifying details, such as the make of car, have been changed for privacy reasons, but apart from that, this is a fair dinkum story.

Tony had managed to land a regular job in the building industry and was getting a steady income. Nothing stellar but enough to pay the bills and have a bit left over to pop in the bank. At this point, Tony didn’t have a car but used the good old pushbike to get to work. So far, so good. But Tony wanted to get himself a car, as it was getting a bit much to bike to work and then slog away all day doing physical manual labour and then bike back again when he was tired. Winter was approaching, too, and although biking on a sunny day makes you feel virtuous, healthy and financially savvy, biking in the rain is pretty miserable and sets you up for being soaking wet all day unless you have somewhere to change. So it was time to head down to the second-hand car yards.

Now, Tony could have used the money he had saved up as a deposit and then found a loan package that let him pay off a manageable amount per week. But Tony thought he was far too smart for that and decided to use the amount he had in the bank as his maximum price limit. Now, this would have been OK if he had a bit more tucked away in the bank  you can pick up a reasonable and reliable car for a four-digit price if you shop around. However, Tony didn’t have that much tucked away. It was four digits, but it was in the lower end of the four-digit figures.That was the first snag. The second snag was that Tony had a particular fancy for one particular make of car and wanted to get that sort and no other.

Tony found a car of the type he wanted for the price he wanted and felt very smug for a while. But then the problems started. Now, the sort of car that Tony loved wasn’t a sports car or anything of that sort but good examples of that car tend to cost a bit more than Tony wanted to pay. If you pay what Tony paid for his, you can expect problems. And the problems certainly came. What’s more, the cost of labour and parts at the local garage to fix the darn thing were well beyond what Tony could manage comfortably, and the mechanic wasn’t as flexible about weekly repayments as a loan company would have been. So it was DIY time.

At the time of writing, Tony’s car is up on blocks in his garage getting worked on during the weekend. All the spare money is going towards buying spare parts, and probably costs him as much as the loan repayments would have done if he had taken out a loan and got a better car. And Tony’s still biking to work every morning!

The moral? If you’re on a budget, it sometimes can be wiser in the long run to buy a slightly more expensive car and get a loan out for it than to buy a cheap old banger that falls to bits and costs you more in the long run. Either that or put up with the pushbike for longer until you have the funds to pay cash for it.