Newb with no idea where to start

[enuenu Lurker Find all posts View Profile Close enuenu]

Hi,
Looking for a used 4WD, my first 4WD. I know I want Toyota but that's about it. Owned a few Toyotas over the years and always found them reliable.
The myriad of engine and body types and their various known flaws is overwhelming to a newb.
I'm not sure if my parameters are even achievable. Maybe if it saves a lot of money a 2WD will do me. Maybe I should get a Kluger?

• Spend $30k - $35k

• Novated lease through work so must be less than 8 years old at end of 5 year lease. So would have to be late 2013 or 2014 model.

• Reliability and ongoing maintenance costs probably No.1 priority

• Would like front and side airbags. I've been a full time firey for 20 years and seen the good work air bags do. I want a safe vehicle. Stability control and anti lock braking a safety bonus but maybe outside my budget. At least ALB required I would say.

• Intend to buy and tow a used pop up camper on dirt roads occasionally. Rare trips on beach if capable, but definitely not a priority.

• Very little off-road use. 90% of time will be used to run family around town.

• Don't really care about power.

• Fuel economy important.

• We live 800m from ocean, so rust always an issue.

• Family camping trips (4 of us). Multiple surfboards on the roof and tents etc in the back. I used to pack it all into a 240 Volvo wagon, however it was a nightmare squeeze. That car exploded last week after around 900,000km of cheap, trouble free motoring. I held onto it waiting for it to die, but it soldiered on for years on nothing but frequent oil and filters. The time finally came last week. Also own a Yaris runabout and been very reliable, may be downsizing to one car family though. Own 2 medium sized dogs that need transporting for walks.

If you can give me a starting point for exact model (including engine model), year and km, that would be fantastic. Otherwise I think I am looking at weeks of research, and even then I won't match the experience of others who really know the brand.
Advice or direction of any kind appreciated.
Thanks.

[Guest Close Guest]

Probably a 120 VX/Grande or a GXL with safety pack (very hard to find) for the safety option around the 2003 to 2006 era to fit into your budget.

How many km a year will you do? I find the petrol to be better around town. The 1KZ is a bit slow and requires 5,000km servicing (oil and oil filter). However both are more reliable than the D4D.

[enuenu Lurker Find all posts View Profile Close enuenu]

Thanks amts. That gives me a starting point. Probably do 30,000 km per year give or take a few thousand.

[enuenu Lurker Find all posts View Profile Close enuenu]

After some poking around I think I will increase the budget to $30k - $35k
Can get novated lease through work but must be less than 8 years old at end of 5 year lease. So would have to be late 2013 or 2014 model

[MacroP Member Find all posts View Profile Close MacroP]

Are you limited to a 5 years lease? I ask this because a 3 year lease may allow you to get a 2011 vintage vehicles which might get you into the well used Prado GX diesel range. Car sales will give you an idea. The repayments for a 3 year lease may be only a little more (if any) because it's a novated lease and how it all works.

I must stress though - please talk to your accountant before entering into a novated lease (if you're salary packaging). As far as I'm concerned, the tax benefits of the past are now mostly gone unless you're a high income earner and the car you're buying is cheap as chips.

[Nik83 Member Find all posts View Profile Close Nik83]

I used to have leases. I now have a car loan.

I went with a car loan instead of a novated lease but I'm still looking at the possibility of novated leasing my car for a year to dramatically drive down the buyout price.
Novated lease risidual rates are the following:
12 months 65.63%
24 months 56.25%
36 months 46.88%
48 months 37.50%

The reasons I went with a loan are the following:

• Novated leasing has few tax benefits unless you're buying replacement parts like wheels/tyres, fuel, or anything already bolted on the car, regularly. The FBT ultimately strips out any benefits. FBT is the "rich people" benefits equaliser.
• Car loans cost about the same amount as a novated lease, but you're paying down the principle in it's entirety. With a novated lease, you can not pay down the principle more than 65.63% on a one year loan. 56.25% 2yr loan and so on. Keep in mind, on a novated lease for $30k, you can pay it down to
  1year NV @ $19689 residual,
  2years NV @ $16875 residual,
  3years NV @ $14064 residual,
  4years NV @ $11250 residual
  but no more.
  
  Then you either have to buy it at that price, sell it, or re-lease (all ok options). You can sell the car at any time, as long as you pay out the value on the car and also pay out the lease company your contractual obligations.
  
  Renewing your lease, every year, is the best option:
  Year1 residual: $19689, renew for a year
  Year2 residual: $12921.89, renew for a year
  Year3 residual: $8480.64, renew for a year
  Year4 residual: $5565.84, buyout.
  
• Due to the lack of tax savings, novated leasing is no longer really that beneficial - unless you're replacing mud tyres every 30,000 kms. Then the savings are still somewhat minimal.
• Novated leasing does bring fuel buying benefits. But is not really worth it when you can't pay-as-you-go. On a fuel card it gives peace of mind as you're pre-paying your fuel, but it can blow out if you go over. Good luck getting your pre-payments back to you from the lease company if you do go under.

So why am I still looking at the possibility of leasing my car? Well simply: I can go on a one year lease, upgrade to mud tyres, wheels, roof racks and a few other things, get fuel tax benefits, and then go back onto a loan at the end of the term, while driving down my residual value to 65.63%.

What's holding me back? I'm currently paying down my loan a bit quicker than a novated lease is able to, but that's hurting my mud tyre fund There's really not much benefit to a lease. Due to the high rate of FBT (20% of the value, per year or, $30000*0.20/[insert paychequeregularity here 12/26/52] , per paycheque - releasing doesn't affect this unless you change the business you work for), I'd be interested in where you could find it beneficial. Apart from Novated Leases being easier to secure than a car loan - which should be a good indicator that they're worse for you.

The way to get a car with less fees/tax these days is by creating a business and buying it through that. But you need multiple clients etc otherwise it will fall back to your nominated tax rate as a sole trader - that's definitely accountant territory. There's a reason most people don't bother these days.

If your employer pays the FBT additional to your wage, then it's not that bad a deal. If your employer is not supplying you the car and is forcing you into a lease without any help, consider changing employers!

If you do go the novated lease route, try to make sure it's got all the expensive kit you want on it (even if it's cheap crap and you're willing to replace it). You're not really supposed to buy new parts on a car via the lease (you can always put new parts on, but funding that is on you), but you are allowed to replace parts - it's a bit of a grey area sometimes. So if it's got a broken winch and you're happy to replace it, fine. If it's got lights, and you want to replace them with light bars, that's understandable... if it doesn't have a bull-bar, after your first roo, it's probably understandable... etc. This is why toyota dealerships will sell a car kitted out with ARB gear - the owner doesn't have to worry about replacing stuff outside of the lease.

Oh and you can always factor in the lifestyle advantages to the cost... but that's a personal thing.

Anyway, hope this helps. I'm not aware of your situation.

[enuenu Lurker Find all posts View Profile Close enuenu]

Thanks for such detailed advice MacroP and Nik83. The only advantage I can see in the salary packaging novated lease is some of the expense comes out of pre tax earnings. I'm well ahead on my mortgage so could just redraw the whole amount I need from there.

I got a quote as follows.

* Vehicle: NEW 2016 TOYOTA FORTUNER GX GUN156R 6 SP AUTOMATIC - 2753 cc - DIESEL TURBO F/INJ 4D WAGON
* Amount financed = $54,959
* Lease term 5 years
* Based on 25,000km/year
* Residual = $13,750
* Take home pay reduced by $688/fortnight to service lease
* Claimed annual tax savings $4,400/year

It seems expensive. However all vehicle costs rolled into these figures. I do wonder if the leasing company take a little slice here and there in the background from say insurance, purchase price & finance costs or they really get the best deals and hand them all on to me and only take their management fee of $21/fortnight.

[Nik83 Member Find all posts View Profile Close Nik83]

Thanks for such detailed advice MacroP and Nik83. The only advantage I can see in the salary packaging novated lease is some of the expense comes out of pre tax earnings. I'm well ahead on my mortgage so could just redraw the whole amount I need from there.

I got a quote as follows.

* Vehicle: NEW 2016 TOYOTA FORTUNER GX GUN156R 6 SP AUTOMATIC - 2753 cc - DIESEL TURBO F/INJ 4D WAGON
* Amount financed = $54,959
* Lease term 5 years
* Based on 25,000km/year
* Residual = $13,750
* Take home pay reduced by $688/fortnight to service lease
* Claimed annual tax savings $4,400/year

It seems expensive. However all vehicle costs rolled into these figures. I do wonder if the leasing company take a little slice here and there in the background from say insurance, purchase price & finance costs or they really get the best deals and hand them all on to me and only take their management fee of $21/fortnight.

They should have an itemised list for you, stating insurance costs, loan comparison rate, where your money is divvied up to on a per-paycheque basis. If they don't provide all of it, consider them sneaky. Usually they're a bit sheepish about providing such figures. You should also be able to select your own insurer.

For roughly that cost (I paid $10k upfront on a Prado GXL), my 5 year loan is $1070/month via toyota, with outright ownership at the end. So there's a ~$420/month money in hand deficit when on a lease. $420x12 = $5048/year. That should cover insurance (lets say $1k), rego (lets say $1k), tyres (lets say $1.5k) and go towards some fuel ($1.5k, or about 15,000kms). Factor in $13750 residual value that you're ahead with in the end of a loan (5 years, that 13750 is in the resale value or the bank - on a lease you have to pay out the lease company), and it's not hard to see where you're better off. Also, leases artificially limit your ability to make more payments (that 65.63% rule comes in to play), you can advance your payments, but you can't go below the residual.

Also, the above things like rego and tyres aren't needed until the second year (factored by the drive away price) and you don't really have to have big fat tyres - you can still do 90% of 4wd tracks.

Food for thought anyway.

Oh, and a look at the toyota website.... http://www.toyota.com.au/special-off...52.91623693802

Based on a loan for $50k, at 7% comparison rate (repayments of $461/fortnight), you'd be $227/fortnight, $490/month (more than a fortnightly repayment), $5902/year better off, post tax.

[enuenu Lurker Find all posts View Profile Close enuenu]

Thanks Nik83,
Lease company broke down fortnightly costs as follows;
Lease $513 ($421 for rental, $46 for insurances, $46 for GST)
Registration $38
Scheduled Maintenance $46
Fuel (9.60 litres/100kms @ $1.65 per litre) $152
Replacement Tyres ^ (8 budgeted for term of lease) $28
Roadside Assistance (Maxxia Arranged) $3
Comprehensive Insurance (Maxxia Arranged) $56
Sundries (incidental costs) $14
Salary Packaging Fees $7.50
Total Fortnightly Lease & Running Costs $857.50

So I guess the fact that a portion of this is paid from pre tax earnings means my pay is reduced by $688 per fortnight rather than $857.50

It is so complicated I'm not sure whether it represents value of not. Maybe just simpler (and better value) to redraw from the mortgage and pay cash? Whether the benefits of "pre tax payments" are eaten up by other inefficiencies in the deal (for me) is the $64k question. You're right, I need an accountant to check it out.

[Nik83 Member Find all posts View Profile Close Nik83]

I'm not an accountant but those figures i put above sell me to a loan :-)

Tax minimisation for the sake of tax minimisation, when it actually hurts your hip pocket. That's how I look at leases these days.

[enuenu Lurker Find all posts View Profile Close enuenu]

I'm not an accountant but those figures i put above sell me to a loan :-)

Tax minimisation for the sake of tax minimisation, when it actually hurts your hip pocket. That's how I look at leases these days.

Thanks. I tend to agree now. Cheers.

[Nik83 Member Find all posts View Profile Close Nik83]

Sorry, didnt read the last paras. Drawing down your home loan will be cheaper unless toyo are doing a very low percentage loan. Might just be easier to manage on your home loan regardless.

Leases are overly complex. A lease vs an average loan , you slowly become about 30-38000 worse off over 5 years... When you add it all up!