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Ask Paul: Am I better off with a novated lease or a car loan?

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Q. I have been trying to do the sums to see if I would be better off getting a new vehicle through a novated lease or a personal loan.

Combined income is around $170,000pa net. - Therese

A. Hi Therese. It really depends on the income of the person who is buying the car and the value of the car.

Any of the novated lease companies can then run the numbers for you.

car loan car lease novated lease should i get a loan or lease new car

You can compare this with the repayment schedule on a personal loan and then you will have a black-and-white answer.

I suspect if you compare the novated lease with a really low-interest personal loan there will not be a lot of difference.

I reckon the real issue is the actual cost of the car.

The advice I have been giving for 40 years is "buy the cheapest car your ego can live with".

They are just money-devouring, depreciating disasters. Sure, we need one but the best advice I can give you is to buy a cheap, reliable one.

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Paul Clitheroe AM is a respected financial adviser and Money's chairman and chief commentator. He is chair of the Australian Government Financial Literacy Board, and author of several personal finance books. Click here to email Paul your money question. Unfortunately Paul cannot respond to questions posted in the comments section.
Comments
Ben
August 3, 2018 6.24am

Click bait with no answer (other than 'check for yourself').

Belinda
August 27, 2018 8.21pm

Best way to buy a car is to save up and pay cash for it.

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