Suncorp Experience

[bcl]

My Suncorp experience : Motor Vehicle Lease GTR

I decided to use Suncorp again for a motor vehicle lease(GTR R35) as I have had 4 car leases with them since 1999 (an STi), the last (another STi) ending January last year. In May 2003 I bought a Ford BA turbo and WRX at the same time, and had 2 concurrent leases. A payment has never been missed. SoI decided I'd use them again, as I was a customer, had a good record and they had my company details. All they wanted was the most recent tax returns, which was reasonable.

The lease application made over a month ago: quoted 7.95%which was a reasonable rate, although I could have got something marginally cheaper through the dealer. I decided to stick with Suncorp, as I thought itshould be easier.

With the application a Contract for Sale was supplied so the car being purchased and purchase amount was clearly identified.

It took 3 weeks for accountant to complete 2010 returns company and personal.

I thought that would be OK, should be no problem as the company has no debt and enough cash to buy a few GTR's, but I chose to financeit for the tax benefits. The company (my personal company) has been operating since 1980. I am 55 with very healthy net worth, and run an I.T company with 7people working for me.

Then, this from Monday this week:

Suncorp wanted various bank statements, company, mortgage, 2 personal bank, credit card, not previously requested

then

Wanted another companies returns (I have a related company)

then

wanted its bank statements

then

wanted originals statement, not Netbank shots of the statements

then

told they will have to charge me 11% not 7.95% (wtf), as amount is over $150k

then

after my protest they will reduce it to 8.95%

then

we will not give you a lease on this vehicle as it is a GTR

then

we will consider giving you a lease if you transfer all your accounts; companies, personal, mortgages over to Suncorp (wtf) …. Response was a quick no way.

Unbelievable.

Every day this week they have requested something new, andwasted a significant amount of my time.

When I requested to talk to a senior manager in loans I wastold I could not, and that she would discuss with her "team leader".

I even said I will be pre-paying lease payments, paying 12months of payments in June, which is to their benefit. I get a tax benefit fromthis, so both parties win. I'm beginning to doubt that they understand that they are running a business.

This is clearly an amateur organization, disorganized, inconsistent, lacking integrity to honour an agreement.

At this stage my car will be ready for pickup in a weekstime.

If there is anyone here from senior management in Suncorp,I'd like to hear from them.

I'm now looking into alternative financing quickly, and on the basis of this experience would not recommend Suncorp to anyone.

Brian

[domino_z]

buy outright and claim the gst instead

leasing cars doesn't make sense, all you're paying in the first couple years is interest only at a time when your car is depreciating the most

Edited April 9, 2011 by domino_z

[bcl]

If I buy outright from the company I will have to pay around $60k in tax. I don't want that.

If I go a chattel mortgage, which is an option, then I can claim the GST, interest and depreciation.

Most of my cars I lease, and keep off the balance sheet. I have been doing that for 30 years.

Tax rates and what can be claimed drive most decisions.

Always happy to hear and explore other options

Brian

Edited April 9, 2011 by bcl

[fungoolie]

buy outright and claim the gst instead

leasing cars doesn't make sense, all you're paying in the first couple years is interest only at a time when your car is depreciating the most

When you lease you borrow the ex GST amount only (except for luxury car limits which also apply for outright purchase), and only pay GST on the residual when you pay that out. If you kept a car till it was paid down to zero then you would have avoided all GST. So you end up claiming part of the GST anyway. On top of that you can claim the GST on the lease payments. And the whole lease payment is deductible even though part of it is principal and part of it is interest. (Novated Lease)

You would generally never take on an interest only lease.

In fact the lower the residual the bigger the component of the lease payments that is principal becomes. We all love being able to deduct principal repayments! You dont get to claim any depreciation on the vehicle when its this kind of lease, (novated not chattel), but you can actually claim MORE than the depreciation if the principal payments exceed what the vehicle depreciates. Then when you get to sell the vehicle any "profit" made which is what the vehicle sells for over and above what's still owing, (the residual), is tax free. Theoretically if the government allowed 0% residual leases you could basically pay the vehicle fully off using tax deductible funds and then sell the car shortly after for slightly less than what you paid for it effectively turning most of the cash you used to pay for it into tax free income. That's why the residual limits are what they are. The government has made them equal to what they imagine the worst depreciating vehicle could be.

As i understand it a chattel lease is essentially just claiming the interest component on the lease payments but also depreciating the vehicle in your name. If you can depreciate it to the limits of 65% for a one year lease or 55% for a two year and 45% for a three year lease as per a novated lease then it's exactly the same as the novated lease as long as you dont get taxed on any amount you sell it for over what you depreciated it to. This is effectively exactly the same as buying the vehicle outright, claiming the GST on $60K (luxury car limit), interest on money used to purchase it and claiming depreciation.

I've done the modelling and novated leasing still comes out tops for the reasons I've explained above.

Edited April 10, 2011 by fungoolie

[Cowboy1600]

If you're interested I can give you the name of a good Finance Broker in Sydney who should be able to help. I work for an aggregator and we have ~600 brokers in NSW alone.

Drop me a PM if you're interesd in beign put in touch with a broker.

[warps]

From what they're saying, it's clear that they don't want to finance the car. Instead of just saying so (that's bad for business) they just keep throwing hurdles at you. Trust me - they won't give you finance no matter how many hoops you jump through.

We had the same when we were trying to purchase a commercial property through an investment group. Initially the bank was happy to loan us the money, but then started asking for more and more ridiculous things from us. We kept dutifully complying till they told us they needed a 90% deposit, otherwise the risk to them was too high.

We politely told the bank manager to go and f**k himself (those exact words)

[GTR-N1]

I wonder if you'd have to jump through less hoops if you had ordered an M3 on lease. Interesting exercise?

Meanwhile, I'd be looking elsewhere. Value placed on loyalty is tenuous these days. Sad.

[Kujotk]

buy outright and claim the gst instead

leasing cars doesn't make sense, all you're paying in the first couple years is interest only at a time when your car is depreciating the most

Cash is king, leasing a car doesn't make sense in most circumstances.

[bcl]

When you lease you borrow the ex GST amount only (except for luxury car limits which also apply for outright purchase), and only pay GST on the residual when you pay that out. If you kept a car till it was paid down to zero then you would have avoided all GST. So you end up claiming part of the GST anyway. On top of that you can claim the GST on the lease payments. And the whole lease payment is deductible even though part of it is principal and part of it is interest. (Novated Lease)

You would generally never take on an interest only lease.

In fact the lower the residual the bigger the component of the lease payments that is principal becomes. We all love being able to deduct principal repayments! You dont get to claim any depreciation on the vehicle when its this kind of lease, (novated not chattel), but you can actually claim MORE than the depreciation if the principal payments exceed what the vehicle depreciates. Then when you get to sell the vehicle any "profit" made which is what the vehicle sells for over and above what's still owing, (the residual), is tax free. Theoretically if the government allowed 0% residual leases you could basically pay the vehicle fully off using tax deductible funds and then sell the car shortly after for slightly less than what you paid for it effectively turning most of the cash you used to pay for it into tax free income. That's why the residual limits are what they are. The government has made them equal to what they imagine the worst depreciating vehicle could be.

As i understand it a chattel lease is essentially just claiming the interest component on the lease payments but also depreciating the vehicle in your name. If you can depreciate it to the limits of 65% for a one year lease or 55% for a two year and 45% for a three year lease as per a novated lease then it's exactly the same as the novated lease as long as you dont get taxed on any amount you sell it for over what you depreciated it to. This is effectively exactly the same as buying the vehicle outright, claiming the GST on $60K (luxury car limit), interest on money used to purchase it and claiming depreciation.

I've done the modelling and novated leasing still comes out tops for the reasons I've explained above.

Thanks for the response; fyi I did Actuarial studies at Uniso I know my way around basic financial calcs.

I’ve had 10 car leases, and they have always suited myneeds.

When the lessor works out the repayments they deduct the gstfrom the principal to use a GST reduced principal from which to determine the repayments, so the lessor canclaim the gst. The gst is added to each repayment and to the residual, and sothe lessee pays and claims the GST.

If the lease is in a company name (mine are), usually Itarget the residual at around what the car would be worth at the end of theterm (typically I target a lower residual); any difference between the saleprice and residual is either a capital loss or profit if it then goes onto thecompany books. Sometimes I get the company to buy the car at the end of thelease, sometimes I buy it personally so it does not go onto the company books(especially if it worth more than the payout); just depends on thecircumstances.

I’m not sure what a chattel lease is, but I know of achattel mortgage. I’ve never had one. From what I’ve read and been told the caris held as security (that’s why its called a mortgage), you borrow the fullamount, you claim the GST, you depreciate and claim that, you claim the interestcomponent of the repayments, and GST is not added to repayments.

In this case the cost of the car is $187,500, made up of:

150,359.85 car + extra + dealer charges

27,868.16 luxury car tax

9,272 Rego& stamp duty

GST is 13,669.07

Looks like GTR owners make a good contribution to theeconomy!

If there are limits on what GST can be claimed (less thanwhat is actually paid), and limited depreciation capability (based on somethingsubstantially less than the sale price), that may a bearing on which way to go.From what I’ve been reading today it looks like the Government has beenscrewing around here.

My company does have the cash to buy outright without aproblem.

I’ll talk to my accountant tomorrow, then determine a courseof action. Unfortunately there is limited time.

As I said before I’m always receptive to other views andideas.

Brian

[bcl]

If you're interested I can give you the name of a good Finance Broker in Sydney who should be able to help. I work for an aggregator and we have ~600 brokers in NSW alone.

Drop me a PM if you're interesd in beign put in touch with a broker.

Thanks for the offer.

[bcl]

Cash is king, leasing a car doesn't make sense in most circumstances.

Not necessarily in a company situation, where it may not be the best option to use company working capital, and better to keep the asset off the balance sheet, and considering the tax advantages and pre-payment capabilities, and capability to exceed depreciation, and the fact that is usually a straightforward facility .... until I struck this one.

A personal purchase is a very different situation

Brian

[NYTSKY]

Hello Brian,

Bit off topic.

Will you be keeping this car as is or following the path of your other builds?

[bcl]

I'm not setting this one up as another project car, and initial intentions (subject to change of course) is mild mods if any. This car is very very good in stock form. 11.0 @124mph is a very quick car in street trim, with excellent handling and braking.

The basic problem with any turbo car is the addictive nature of the beast, once you get used to the power you want some more. I got the bug in 1982! However, I'm at the stage where I don't want to increase power to anywhere near the level where I start breaking things, and reliability is a more important factor for this car.

I have another project happening with my old STi, with Cosworth motor & E85, which will be used for circuit racing, and that has priority this year for me.

Brian

[Cowboy1600]

On another note, is all this fcuking around really worth the hassle?

Do you stand to make so much in savings that it's worth all the time and effort? What do "you" make an hour? ie. how much does one hour of time contribute to your business? If you are as successful as you souond, I'd say your "hourly rate' Is quite high. Now how many hours have you spent fcuking around thus far? Divide your savings by that and what's the result?

I've never understood the absolute need to squeeze every last penny out of every transaction I've ever made. But then again I've never been terrifically wealthy. I've been poor though, so I suppose I know the need to scrimp more than any, but this kind of fcuking around has never made sense to me.

Anywho, offer still stands to put you in touch with a top quality broker, should you wish.

Take cash, buy car, enjoy car. One great way to deflate a purchase like this is to put yourself through such unnecessary hassle.

[LSX-438]

BCL sounds like they've stuffed you around, sounds ike a PITA.

You may want to try St George (that's who i use) i've had zero issues with them (Chattel) and i didnt need to jump through those hoops.

[Kujotk]

Not necessarily in a company situation, where it may not be the best option to use company working capital, and better to keep the asset off the balance sheet, and considering the tax advantages and pre-payment capabilities, and capability to exceed depreciation, and the fact that is usually a straightforward facility .... until I struck this one.

A personal purchase is a very different situation

Brian

Well I didn't say the words "in most circumstances" just for fun....

Only lease worth it at the moment is Mercedes finance, where you pay NO INTEREST, I didn't bother reading the fine print or anything. But if it is truely no interest then there is no issue, in fact you'd be better off.

[domino_z]

there'd have to be a monthly fee, admin fee, early termination or something

no banks are giving out free credit......especially not in this worsening gfc

[fungoolie]

Well I didn't say the words "in most circumstances" just for fun....

Only lease worth it at the moment is Mercedes finance, where you pay NO INTEREST, I didn't bother reading the fine print or anything. But if it is truely no interest then there is no issue, in fact you'd be better off.

The prob with "No Interest" loans is that they just factor the interest into the purchase price. Guaranteed if you negotiated and then settled on the basis of cash then hit them with the can I have the No Interest Finance they would pull out of the contract.....

[fungoolie]

On another note, is all this fcuking around really worth the hassle?

Do you stand to make so much in savings that it's worth all the time and effort? What do "you" make an hour? ie. how much does one hour of time contribute to your business? If you are as successful as you souond, I'd say your "hourly rate' Is quite high. Now how many hours have you spent fcuking around thus far? Divide your savings by that and what's the result?

I've never understood the absolute need to squeeze every last penny out of every transaction I've ever made. But then again I've never been terrifically wealthy. I've been poor though, so I suppose I know the need to scrimp more than any, but this kind of fcuking around has never made sense to me.

Anywho, offer still stands to put you in touch with a top quality broker, should you wish.

Take cash, buy car, enjoy car. One great way to deflate a purchase like this is to put yourself through such unnecessary hassle.

Yes it is worth the hassle! What you've described is really just a cop out because you simply cant be stuffed. When it comes to high value purchase and financing decisions people spend less time sorting out this stuff than they do determining which big screen TV to buy or what wheels or exhaust to get for their car. It's because this stuff isn't "interesting". But I'd rather invest a day or so researching this than worrying about whether or not I got the best deal on a laptop..... As an example buying a GTR privately with cash would have the car cost you roughly $40,000 in the first year of ownership. Same car with a 65% residual novated lease with you on a >$100K salary will drop the after tax cost to around $22K. Using a less effective lease, say a chattel lease with you depreciating the car only say 20% per annum in your name would increase the cost to $32K. Now I don't know about you but there's not too many businessmen around who I believe would blow $10K or $20K in a day simply because they're too slack to spend a day enquiring about this stuff. And this is after tax! How much do you have to earn to compensate for this pre tax? Every buck saved is two bucks you have to earn. How many earn $1-2K an hour? And honestly, the super rich ones who won't spend the time doing this would have trusted people they use to do it for them..... I like to think of these things this way...that $20K saved will buy me 5 sets of rims, or 6 sets of tyres or maybe a nice 200KW power upgrade or even an extra R35 for the missus ....A YEAR.

In my observations in the banking world I've witnessed how some high net worth clients who don't do their homework simply because it's "too hard" or "uninteresting" end up paying tens of thousands, even a hundred thousand extra in purchasing a house. And I believe there is no better way to "deflate" the purchase of a new toy than when you get that nagging feeling or someone tells you afterwards that you've just been rogered by the finance deal or in the small print....Not because you had to nut out a few issues....Of course you could just put your fingers in your ears and go naa naa naa when you hear those voices but I don't work that way...I actually get a feeling of satisfaction when that craps all sorted in my favour...

Take cash, buy car, enjoy car? You will become poor.... That's why these people taking the effort are buying GT-Rs and not VN Commodores.Because it's how they deal with everything of a financial nature.Look after the cents and the dollars will look after themselves.

Edited April 11, 2011 by fungoolie

[fungoolie]

BCL sounds like they've stuffed you around, sounds ike a PITA.

You may want to try St George (that's who i use) i've had zero issues with them (Chattel) and i didnt need to jump through those hoops.

I use NAB. Their lease has no hidden fees, ie the interest rate is the actual interest rate and also if you choose to extend the lease after a year or two the details are written into the Ts and Cs that it is simply an extension and not a new lease therefore you don't cop the risk of having to pay the GST again on the "above luxury car tax limit" component of the financed amount that you had to pay when you first took the initial lease up. I had to jump through those hoops when I used a finance company that I didn't have other borrowings with but if you stick with who you have all your personal and investment finance with you generally don't get asked for financials again. And they had no issue with it being a GT-R.

Edited April 11, 2011 by fungoolie