sinkas

Hi all,

I have quit my profession and have gone back to Uni to get into a more satifying profession. The question I have is how do you guys afford to buy an RX8?

My Wife has just recently chagned jobs and was offered a $1K a month car allowance, I thought, hey looks like its time to get an RX8, but as far as I can see it wont come close to covering the costs.

So do you guy have massive wages, ie Takahashi, obviously does (Pathologist)

or do you salary package your cars?
Even once I reurn to full time work, I still cannot see how cars and afordability fit into the same sentance.

So guys how do you finance your cars, and how do you justify the cost?

Hope this is a OK question, but maybe someone has some tips..


Cheers

Case

AMG

sinkas:

1. What's a massive wage?
2. What do you mean by how can you afford an rx8?

Affordability is often a lifestyle choice, some people go without somethings to buy a good car, others have cars as their priority.

I made a decision to HP my car in the company car, I'm self employed and my income is dependant on what I want to earn.

I know a few peolple in the top 10 rich list in South Australia. One has an AMG SL500, Maserati, 360 Modena, and some four wheel drives for daily cars (he is the least rich). The richest drives a 12 year old beat up camry because it suit's his lifestyle. Another one has an Audi TT as his extravagance. Another friend of mine, a restranteur is awaiting delivery of a new convertible maseratti.

I see the RX8 as good value for a professional person.

Ultimately I'd like a maseratti or an M3.......but that would be my lifestyle decision. Whereas others may want to channel the money into debt, property managed funds or a bank. In the end affordability is a lifestyle choice.

Gomez

AMG, my neighbour has a Maser 3200 GT, cost over 200K a few years back.....not my cup of tea though, the "sad" tailights detract from the package I reckon. That, and the fact that it's bloody yellow!!!! Lovely note from the thing though.....

sinkas, I've leased mine, if you're in the top tax bracket (over 60K/annum) you're mad to pay for it any other way, I reckon.....If you earn under 60K, best you have no kids or wife!!!

Pricer01 posted on this subject some time back, do a search on his posts, he's in banking.....

Gomez.

DragToys

Yeah for me it was a novated lease.
Being on over 60k it was the smart move instead of buying.

My RX8 with everything included ie fuel rego insurance, car, servicing is a $26k a year sacrfice.

So as AMG said it is a lifestyle choice.
I am a electronics engineer for boeing.

Many people have money tied up in housing and other debts, but I don't have any large debts like that.

Besides witha novated lease you get the insurance protection so if you loose your job you just hand it back

DragToys

Also I am reading some past posts.

Has anyone actually bought thier RX8 ???
It seems everyone leased it.

So I want to know when everyone leased and for how long so I know when the market is going to drop

AMG

The price will drop when the RX7 comes out and there are a rush of tradeins:p

Gomez

Haha, the market will drop in 3 years, if everyone else did the same as moi....but I think I'll keep mine (unless a forced induction model is released at a reasonable price!).

AMG

By then they'll be a dime a dozen, but hey sinkas I'll sell you mine then.

sinkas

Hi all,
thankyou for your responses to my query.
Well frankly in my previous profession, research science, it would have been tough to get a wage over $60K full stop.

I think a "massive" wage would be 120K plus pathologists get around 230-350, and many of them still drive hyundais and wear bonds polo shirts.

Anyway,

I tried to find the posts by pricer01, but could not come accross anything seemingly related, anyone remeber when.what the subject line was?

So are novated leases tax deductable, or what, who are they brokered through, just a bank or a third party?

Is there a residual, or you just get a new model each 2-3 years?

Gomez

Here you go sinkas, I had to go back a fair way to find it, but here's Pricer01's thread...

https://www.rx8club.com/showthread.p...714#post246714

I have my lease through Esanda Fleet Partners, they have a calculator on their site, it shows the cost saving through novated leasing....and yes, there is a residual at the end. You can hand the car back and get a new lease on another car, or pay the residual (plus the GST on that amount) and buy the car outright.

Regards, Gomez.

Wildcard

I bought mine. (Well got a loan for it any way). Right now my credit union and I own about half each.

A don't like the way a lease binds you into a contract for x years and stipulates how many km's you have to put on the car per year. Plus I intend to own my RX-8 outright someday.

I'm not trying to get into a debate about the pro's and con's of leasing here - I'm just saying it didn't suit me.

My justification? Life is short!

Hymee

iTrader: (1)

Sinkas,

Here is how my novated lease works...

The car cost rounded 60k on the road. The novated lease includes a finance component. It was up to me to determine the period of the lease, and the residual value. At the end of the lease (whether it be the "natural" end, or I get unemployed, or I choose to go for another car), I have to pay the finance company the residual value (or the balance owing on the "loan" at that time). I could choose to pay cash and keep the car, but more often than not people choose to sell the car to get that money. I can hand it back, but if "they" sell it for less than what I owe, then I am up for the shortfall - so I don't think it is risk free in that respect.

I chose a long period, and a fairly low residual value amount. Generally, the longer the period will reduce the monthly repayment, as will a higher residual. The risk with the high residual is the payout figure is less than the cars value when it is time to get out. It cost me $5K to get out of my SS. I didn't feel I made a bad decision at the time I did the finance, I just got out at a bad time (the **** had fallen out of Commies, and only 18 months into a 3 year deal).

Then there is the Runnning Costs component. This includes insurance, registration, fuels, services, tyres etc. The way my leasing company works - www.nlc.com.au - we agree on a budgetry amount for all of that.

Then there is the Fringe Benefits Tax component. Your employer has to pay that, but usually pass it on the the employer. The whole idea is I totally fund the car from money that would otherwise be in my pay packet. If you use the car for lots of business use (i.e. a salesman) you can not have to pay FBT (or pay less) but you have to keep log books, and be prepared to be scrutinised. Or, for most people, you can choose the "Statuatory Formulae" method - whereby you nominate the total km you will travel in the FBT year, and a rate of FBT is determined on that. It doesn't matter if the car is used for 100% private use, and you don't need to log book it. You just have to provide odometer readings at the start and end of the FBT year. The more km you do, the less the FBT rate is. It is a complex formulae, but you can approximate it. If you do less than 25000km/year the rate is something like 22%, 25,000-40,000 it is 11%, and over 40,000 it is 7% (??) I think. Basically the FBT is that percentage of the purchase cost of the car, each year. So for my RX-8, I pay about $6,000 per year just in FBT, as I nominated 30,000km/year.

So the more km the less FBT, but also the more running costs and lower resale value. The actual FBT formulea can be worked out, and the ATO has all the info on there site. It is much more complex than what I said, but the calculation I gave is roughly correct. [The actual formulae uses the "FBT Base Cost" of the vehicle, which is the sale price including GST, but excluding rego (and stamp duty?). Then there is this stupid "grossing up" that needs to be done, then there is the actual rate of the FBT tax 48.5 cents in the dollar, etc, etc, etc.]

All of those 3 things above add up to something like $21,000 per year for my situation. This whole amount can be "salary sacrificed". Work takes this out of my salary PRE TAX (that is why they must pay FBT). I get paid as if I earned $21,000 less per year. But it doesn't really cost me $21,000 dollars per year. It actually reduces my take home pay by around $10k per year ($900 per month), because I would normally have paid close to 50 cents in the dollar in income tax on that $21K if I took it in "cash".

There are a couple of other "good bits" that have come into play since GST: The car is basically GST FREE.

The Leasing Company claim a GST Input Credit on the purchase price of the car. That is nearly 6K for the RX-8 (or anything more expensive - it is capped). Effectively, that is $6K the Leasing Company doesn't have to finance from wherever they get the money. The nett effect of that is your finance is sort of for less money. The repayments take that into account, although the documentation all reflects the original value of the car.

All the running costs I incur get charged back to the leasing company, including GST. But they claim a GST input credit. They keep a tally of the actual running costs v's the budgeted amount, and provide 1/4'ly reports. The lease amount can be changed to re-balance the figures. These running costs are tallied "GST free" as they claim the input credit from the ATO.

The invoice the leasing company sends to my employer each month includes 10% GST (and that includes the GST on the repayment). That sort of puts the GST back on to all the running costs as well. But work claims the GST amount back from the ATO, and passes on the "saving" to me.

Lots of fun and games playing with figures on this Best to get the advice of an accountant! It is very dpendant on your situation.

Cheers,
Hymee.

Gomez

If you get the choice, go with Hymee's lease company, nlc. They were absolutely terrific with my last lease....post of the day to you, Hymee.

Gomez.

AMG

sinkas, what are u studying now?

playa78

I also had a chance to to novated lease but for my situation, I worked out it was better off buying off the car (with a bit of loan) as I don't travel more than 15000km per year. (work is only 10min away =) It is not worth all the pain and stress of having to make up the kilometres. our company was using a novated lease company called Novalease (http://www.novalease.com.au)
plus, it wouldn't cover for insurance anymore, and if u worked it out, it would be paying almost $90000+ for 3 years lease (well, at least pre-tax but still..) and either return the car or buy the car back for about half the original cost... so if u calculate it, it doesn't really give u much discount unless you are a person who does a lot of km's.. (as the FBT is calculated according to the mileage) FBT is actually calculated as maximum tax (48.5%??) times the statuatory fractions... if you don't do more than 15000km, you will actually be much worth off.. well, with buying the car outright (even with loan) you know that you are buying the car and it's wholly urs when fully paid off and can use it as much or less as u want.. with novated lease, it's a good benefit if you are a person who does a lot of kms. but I wouldn't wanna feel like I have to buy the car again after 3 or so years of lease which I have been driving for that much years..
my point is, tailor it to your situation.. for me, the novated lease was actually worse off.. even though my salary is around 60k mark and do pay lot of it to tax =(

sinkas

Hi All,
Abig thanks to Hymee for the rather informative post, much less out in the woods now.

However I thought that salary sacrifice was limited to benevolent institutions..

Oh and too AMG, I am study to become a Chiropractor, 5 years of fun

Cheers

Case

AMG

you just want an income that far exceeds taka!

sinkas

I doubt it!
I think the aveerage chiro only makes about 80-100 once established,

Anyway, not in it for the money, just wanted to do something better than science, which was boring as bat ****, and a area full of old private school boys who didnt make it into medicine plauged by perfomance anxiety and inferiority complexes...its endemic

AMG

at 40 for a ten minute manipulation, I think you'll make more than 100k per year.

Choppy

I bought mine outright as thats what suited me.. I dont like taking out loans/Lease etc.

I too run my own business (Online) that has permited me to get the car

Regards
Phillip

takahashi

Mate... I don't earn big wages!

I just able to purchase a car out right. Now I can't afford modding it.

It is ok to finance it you it is tax deductable... better have a business to write it off. I always tell dad to do that!

Taka

Ageo

for me chattle mortgage which is like a Hire Purchase (type of finance) it allows me to write it off on tax yes but what a chattle mortgage allows me to do is recoup the gst on the car within 3 months depending on the usage (90% in my case. where is Hire Purchase i have to recoup it over 5 yrs) and dump it back onto the car which reduced my monthly repayments and in turn i pay $648 p/m with a $28000 residual at the end of 5 yrs (but i will get rid of it in 2-3yrs) so for me it doesnt pay to own a liability.

In your case sinkas, i have no idea but speak to somebody that does.

HTH

DragToys

Hmm, yes hymee good explanation.

Mine is through commonwealth fleet lease, as that is where boeing leases all its cars. Their finance rate was very cheap due to the nature of boeing being the employer. So to keep us going to them they give us very good rates.

takahashi

Dentist make more money than a Pathologist... especially the one that like AMG :D

No matter how good I am, I will be just an employee of Mayne or Melbourne Path

No millionare but able to put my kids to private school and with a RX8/or next RX-7 and a medioka house

Ultmately... Gomez I want a SLK 55 AMG or even a SLR.... right AMG?

AMG

medical specialists wages far exceeds that of a dentist in the national surveys. I'm financing my 8, you bought yours , says it all. LOL!