CASE STUDY: CHATTEL MORTGAGE
Chris is a painter who needs a ute for his business. Without the cash to go out and buy a new one upfront, Chris considers his options and calls Jim’s Vehicle Leasing to ask about some easy car finance for purchasing a Mitsubishi Triton.
The experts at Jim’s ask Chris to give them an idea of his financial situation and income so they can match him to the best option. Chris tells them he makes about $60,000/year and is a home owner. However, Chris admits that his financial records are incomplete, so the team at Jim’s Vehicle Leasing suggest a ‘low-doc’ chattel mortgage, paid back over 60 months.
This brings Chris’s monthly repayments to $553.34 which are easy to manage at just over a tenth of his monthly earnings. Chris is delighted and his staff are impressed by the new Triton.
CASE STUDY: CAR LOAN
Jeff is a manager at a small company and needs a new car. Because Jeff has a family to support, he doesn’t quite have the money to go out and buy one straight away, so he calls Jim’s Vehicle Leasing to ask about the car finance rates on a 2014 Kia Sorento, worth just over $25, 000.
Jeff agrees to pay the loan off over four years which puts his total monthly rental cost at $395.
Jeff earns around $70,000 per year in his job, and despite his outgoings, finds the payments are well within his means.
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CASE STUDY: NOVATED LEASE
Jessica is doctor, has two kids, a long term partner and makes around $120,000 per year. She decides that it’s time to upgrade the family car and calls Jim’s Vehicle Leasing to ask about the best car loan rates on a novated lease.
Jessica knows that a novated lease has a couple of serious advantages, the first being that all of her vehicle’s running costs are packaged as one convenient monthly payment. This means Jessica doesn’t ever need to worry about insurance, registration, maintenance or fuel, which works well with her busy schedule.
The second major advantage of a novated lease is that the car and its running costs are paid for out of Jessica’s pre-tax salary. This lowers her taxable income and saves her money.
But how much?
Jessica asks the vehicle leasing experts at Jim’s to find her a suitable car so she can get to and from work. Jim’s suggests a new Volkswagen Passat, worth around $31,000 paid off over 36 months.
With all of the vehicle’s running costs included in the cost of the lease, the monthly payments come to about $1,145.74. This means that instead of taking home $7,091 per month after tax, Jessica takes home $6, 199 per month, but “hang on,” she asks, “how is this saving me money?”
Paying for the vehicle from her pre-tax salary puts Jessica in a lower tax-bracket and saves her around $9134 in payable tax over the three years. Jessica also takes advantage of her employer’s ability to claim G.S.T and this saves her an additional $2701. Jessica is very pleased to realise that by salary packaging her car with a novated lease, she’ll save nearly $11,386 over the three years of the lease term.