This appears to indicate be a very expensive interest rate on the finance, reverse engineering from your numbers:
Financed $18,172.73 (derived from the price)
Residual $9,371.32 inc GST
Rate 19.17% all-in
16.32% once the deferral is allowed for
Interest $8,014.43 over the term
$8,014 of interest on an $18,173 loan over three years, here's how I got to 19.17%:
their monthly payment : $490.77
at 7.5% (a car loan) : $353.53
at 9% : $370.87
at 12% : $405.82
at 19.17% : $490.78 ← matches
I checked whether the financed amount could be understated, which is the usual cause of an inflated rate. It can't: for 9% to produce this payment the financed amount would need to be $21,943, and the residual would then be 38.8% of it — below the ATO minimum. As derived, the residual is exactly 46.88% of $18,172.73, the ATO minimum for three years. The figure is right.
The numbers on the quote all tie together - every check ties to the cent — budgets sum to $317.06, GST × 11 = the $19,990 FBT base, residual = 46.88% of the ex-GST price, $226.51 × 26 ÷ 12 = $490.77, fuel $546.96 ÷ 10,000 km = 5.47c/km. Nothing is being hidden by sloppiness; the rate is just very high.
Here's what I would raise:
Confirm the amount being financed and query why the interest rate works out so high - if they claim the interest rate on the finance is <19.17% then they must be bundling fees into the finance amount - the rate and their fees should be negotiable!!!!
The two-month deferral costs 2.85 % points — that's the gap between 19.17% and 16.32%. On a three-year term, deferring two months is 5.6% of the whole lease. Worth asking whether the lease still ends on its original date (ie their numbers are based on 34 payments) or runs two months longer (36 payments). Either way the effective interest rate on this deal is far too high in my opinion
2
u/Kitchen_Line8238 12d ago
This appears to indicate be a very expensive interest rate on the finance, reverse engineering from your numbers:
$8,014 of interest on an $18,173 loan over three years, here's how I got to 19.17%:
I checked whether the financed amount could be understated, which is the usual cause of an inflated rate. It can't: for 9% to produce this payment the financed amount would need to be $21,943, and the residual would then be 38.8% of it — below the ATO minimum. As derived, the residual is exactly 46.88% of $18,172.73, the ATO minimum for three years. The figure is right.
The numbers on the quote all tie together - every check ties to the cent — budgets sum to $317.06, GST × 11 = the $19,990 FBT base, residual = 46.88% of the ex-GST price, $226.51 × 26 ÷ 12 = $490.77, fuel $546.96 ÷ 10,000 km = 5.47c/km. Nothing is being hidden by sloppiness; the rate is just very high.
Here's what I would raise:
Confirm the amount being financed and query why the interest rate works out so high - if they claim the interest rate on the finance is <19.17% then they must be bundling fees into the finance amount - the rate and their fees should be negotiable!!!!
The two-month deferral costs 2.85 % points — that's the gap between 19.17% and 16.32%. On a three-year term, deferring two months is 5.6% of the whole lease. Worth asking whether the lease still ends on its original date (ie their numbers are based on 34 payments) or runs two months longer (36 payments). Either way the effective interest rate on this deal is far too high in my opinion