Salary Packaging Vs Buying Car Out Right

[Tomek]

As title suggests, wanting to hear peoples experiences/ opinions.. On salary packaging (leasing) cars vs buying them outright..

If I were to package a car it would be an VW golf or an Audi A3 second hand 06-08)... But buying out right it leaves me with either an 04 Golf GTi or an i30 due to maintenance/ out of my pocket reasons ..

Edited June 20, 2010 by Tomek

[MRSAMO]

Salary packaging would be better if :

- your salary is higher than 70k (thus you buy a more expensive car)

- you do a lot of Ks which SP may cover maintenance and expenses

[warps]

Also remember FBT considerations. If you don't do many (any) legit business related km, you get charged FBT on the total value of the car (depending on the number of KM you do in a year). The more km you do, the less FBT you pay.

Talk to your accountant.

[GT-R32]

It's not that complicated. You just need to run through some scenarios yourself and use an online calculator, making sure you get your figures correct.

This one gets reasonably close (for me anyway) and will give you an idea:

http://www.fleetplus.com.au/client_centre_calculators

If you do 25k kms a year FBT is 11% on the value of the car (assume 0% business use).

I'm going through the same thing now, selecting the right car is the annoying thing though.

If you don't earn the money or do the kms, it can be expensive.

[Kujotk]

it benefits the employer a lot more than an employee. The FBT doesn't make it look so good either. Unless you are doing high km's for work it isn't really that crash hot... Insurance is higher aswell isn't it.

[scarf]

You need to use it for business to make leasing worthwhile. take into consideration the balloon payout at the end of the lease. You may find the ballooon is higher than the market value of the car, and find it difficult to sell.

As others have said, you need to be on a good income to maintain the payments, or after a short time you'll feel as if the car is a burden.

I would prefer buying outright. Getting the car at the best price possible, and selling for a 'reasonable' loss ater a few years.

[GT-R32]

If you naturally do the kms it can work out well. I'm expected to use my own car for work and I'm sick of daily driving a GTR, so it fits. But it does depend on those kms, the car you choose, the finance you're offered and your tax bracket.

[Duncan]

Don't forget that with a packaged car, all maintenance is tax and FBT free.

So if for example you go to the track and get through a lot of tyres and brakes, its all pre tax.

Also, fuel is pre-tax....depending on the fuel economy of the car that can add up to a lot.

Re insurance, it is also pre-tax and generally much cheaper than you can get personally because the leasor will have substantial fleet discounts with the insurer. Donwnside is you can't choose the insurer so you get their conditions