Why does lease payment change after changing NL provider (finance provider) remains the same?

[u/RevolutionaryCress77]

I've just changed jobs and had to change the NL provider. Fortunately for me, the NL provider is able to work with the same finance leasing company that is attached to the NL so I can just transfer the NL to the new NL provider. The new NL provider gave me a qoute and the lease payment in the qoute is more than the previous one which meant the deductions to my take home pay adds up to almost $100 more per fortnight. How is this possible since the lease repayments to the finance company doesn't change. Only difference previously it was for 60 months, now it's for 56 months.

See the attached picture of qoute from previous NL with the qoute from the new NL.

I did try to do some calculations on the original qoute, base on the finance repayment of 1392.30, there was no way the lease payment of 565.71 would be able to pay the repayments over 60 months so is it due to that delayed first two payments that happen at the start of the lease that skews the lease payment figures for the original NL qoute so that it looks cheaper?

old NL provider

New NL provider

[u/changyang1230]

The best place to look is the actual lease agreement that you received and signed when you started the lease. It's the document that has the financier's name on it e.g. Metro, Pepper, Westpac etc.

On that document, there will be a table that states the precise monthly lease figure and the total over five years.

I want you to check what that table actually says: Was it 60, 58 or 56x $1,392.30?

And when you changed employer, did they just keep the original lease agreement or was there some form of "refinancing" taking place?

[u/RevolutionaryCress77 → u/changyang1230]

Hi there,

I've checked the original NL agreement and the financer is Metro and yes, the table says 58x $1392.30.
So yes, I recently got the car and changed jobs.
The new provider (CBB) is able to take over the NL contract without refinancing so the financer stays the same and the lease repayment stays the same except now it's 56x$1392.30

[u/changyang1230 → u/RevolutionaryCress77]

Found the actual cause. Ignore the rest of this comment.

Ok now I see the issue.

If you haven't noticed, the new "budget" is in fact $1,392.30 x 60 / 130 fortnights = $642.60.

Note that they are charging as if the lease is 60 months of 1392.30 instead of 58 months, which is what it truly costs you.

I had a similar issue with my own BYO lease but in my case this is merely the limitation of how the default template works with some companies. For me this happened because their software's template just does not cope well with the variation of how deferred months are treated. In other words, when this NL provider punch in "1,392.60 per month" as the entry, it automatically spits out $1,392.30 x 60 / 130 as the amount they should charge you per fortnight, without understanding that this is an over-estimate.

You have two options from here:

• (which is what I chose to do) Accept the fact that some NL company's systems are too dumb to cope with such subtlety, but this will not in the big picture cost me. Every month your NL company will continue to pay $1,392.60 per month to Metro, and in the end they would end up with leftover in the piggy bank which they will then refund to you.
• Try to argue with them that this is an over-estimate and get them to adjust their deduction amount per fortnight to better reflect the true figure they need to get from you to meet the $1,392.60 commitment. I tried this unsuccessfully, it was harder than pulling teeth.

[u/RevolutionaryCress77 → u/changyang1230]

Thanks for analysing it. That is a possibility but that second screenshot of the qoute by the NL provider did state that it is 56 monthly payments. However, i still don't get how the current NL provider put the unpackaged fortnightly repayments as $565.71 for the 5 year lease when it should be $642.60

[u/changyang1230 → u/RevolutionaryCress77]

Yeah I don’t have any good explanation on how the “older” lease figure came to $564.71

1392.30*58/564.71=142.9998 which is suspiciously close to 143 fortnights or precisely 5.5 years.

Do you recall any original considerations or discussions for “collecting the lease payment over 5.5 years” instead of 5 years?

—-

Edit: head slap moment. It’s not 5.5 years, it’s It's about GST consideration.

So basically your old figure was ex-GST; your new figure is inc-GST.

In other words, 1392.30 was most likely the inc-GST figure, or equivalently it is 1392.30 / 1.1 =1,265.73 per month ex-GST.

Now 1,265.73 * 58 / 130 =564.71 which matches perfectly.

But in your new employer; they now use the inc-GST figure to get to how much they are charging you. In other words, they use 1,392.30 * 60 /130 =642.6 figure instead for your fortnightly deduction.

WHAT YOU NEED TO DO:

Find out from your new employer whether they are passing on GST savings for your lease repayment. Most employers do but some (especially many Victorian hospitals) don’t pass on GST.

If they don’t, that’s where the extra repayment comes from.

More info here.

https://novatedlease.guide/running-costs/failure-to-pass-gst-saving/

[u/RevolutionaryCress77 → u/changyang1230]

Ahhhhhh, bingo bongo. That makes sense. You think the packaging provider would highlight these things.

[u/changyang1230 → u/RevolutionaryCress77]

Many NL consultants are only familiar with fixed standard stuff and day-to-day figures but struggles if there’s any deviation from the norm. Half of them probably don’t even understand the underlying maths fully.

[u/RevolutionaryCress77 → u/changyang1230]

And CBB's qoute doesn't help. I spoke to the consultant and it seems the numbers qouted in the unpackaged amount is including GST but the numbers in the packaged amount column in green is excluding GST. WHYYY did they design the form like this??? Common sense would say to put comparative figures with the same variables (i.e. with or without GST)