New Car OR Used Car + Holiday
So do you want a new car with that fresh just of the show room floor smell, or will a used car and a 10 day tropical holiday each year be more to your liking?
In basic terms, that is often the real choice when you sit back and look at the numbers. Unfortunately it is not the choice most car buyers recognise, which if you enjoy driving on a free way more than lazing on a tropical beach, well that is fine.
On average you will be paying about 10% to 15% less for a car that is 3 to 6 months old, when compared to buying it straight off the showroom floor. So let someone else take the upfront depreciation hit and go for an almost new car. What's more use a Novated Lease to save even more running your car. The lower buy cost will also make this option more attractive due to how the FBT rules work.
Try the below Novated Lease calculator and compare by just changing the value of the car and look at the total cost. Ignore the total savings it calculates and compare your two options by the total cost. I tried the difference between paying 40k for a car and 35k and the running costs over 3 years went from $37,989.32 to $35,107.47 down on row 50 (Based on answers of Yes, Yes, $35k/$40k, $1.40, 20,000km, 11, $500, $2,500, $800, $300 in the green cells). So that is $2,881.85 over 3 years or $960.92 a year lower cost for the 35k used car verses the 40k new car.
Now remember that does not include any borrowing costs for the $5,000 difference, which will be around 10% or $500 a year. Even if you didn't borrow the money to buy the car you have to factor in the opportunity cost of not paying down other debt or investing that money and getting a return on it. So it is still an additional $500 if you expect around a 10% return on investments.
Total cost difference per year is the $960.62 plus the $500 finance or opportunity cost giving you a total of $1,460.62 per year just for that fresh car smell (which is actually toxic plastic fumes by the way). If you are like most families and have two cars, then double this to get $2,921.24 a year you are blowing for the privilege of saying you bought your car off the showroom floor - or you could take the family on a great overseas holiday to an overseas tropical resort each year....
I'll take the holiday thanks - see you by the pool at the Sanur Hilton in Bali, sipping on cocktails!
In basic terms, that is often the real choice when you sit back and look at the numbers. Unfortunately it is not the choice most car buyers recognise, which if you enjoy driving on a free way more than lazing on a tropical beach, well that is fine.
On average you will be paying about 10% to 15% less for a car that is 3 to 6 months old, when compared to buying it straight off the showroom floor. So let someone else take the upfront depreciation hit and go for an almost new car. What's more use a Novated Lease to save even more running your car. The lower buy cost will also make this option more attractive due to how the FBT rules work.
Try the below Novated Lease calculator and compare by just changing the value of the car and look at the total cost. Ignore the total savings it calculates and compare your two options by the total cost. I tried the difference between paying 40k for a car and 35k and the running costs over 3 years went from $37,989.32 to $35,107.47 down on row 50 (Based on answers of Yes, Yes, $35k/$40k, $1.40, 20,000km, 11, $500, $2,500, $800, $300 in the green cells). So that is $2,881.85 over 3 years or $960.92 a year lower cost for the 35k used car verses the 40k new car.
Now remember that does not include any borrowing costs for the $5,000 difference, which will be around 10% or $500 a year. Even if you didn't borrow the money to buy the car you have to factor in the opportunity cost of not paying down other debt or investing that money and getting a return on it. So it is still an additional $500 if you expect around a 10% return on investments.
Total cost difference per year is the $960.62 plus the $500 finance or opportunity cost giving you a total of $1,460.62 per year just for that fresh car smell (which is actually toxic plastic fumes by the way). If you are like most families and have two cars, then double this to get $2,921.24 a year you are blowing for the privilege of saying you bought your car off the showroom floor - or you could take the family on a great overseas holiday to an overseas tropical resort each year....
I'll take the holiday thanks - see you by the pool at the Sanur Hilton in Bali, sipping on cocktails!
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