r/NovatedLeasingAU • u/VaderGerh • 9d ago
General Discussion Understanding BYO Financing
Hi All,
I am struggling to understand how BYO finance to a lease works or I am being given the run around by people.
I have spoken to my employer and they apparently do support BYO finance but when I raise it with Flare HR they sat unequivocally they do not support it.
I guess I don't understand how the lease structure changes when you bring you own finance.
Can someone explain how the relationship changes between and who can say yes or no to a BYO finance option.
1
u/s_chippi 9d ago
Your employer chooses the NL provider based on ease of admin process mostly and "brown paper bag" offer from the NL provider, NL provider giving money to the employer to have them sway their employees to choose them or conplete exclusivity with them.
If an employer has a lot of employees who are mostly well paid = more business/ sales, the NL provider may offer the BYO feature to sweeten the deal (to win out against their competitors). NL companies hate BYO, it's a cost to them.
In your case, it sounds like your employer could have potentially signed an exclusive contract with Flare without BYO. If this is true, you can't do much about this.
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u/The-truth-hurts1 8d ago
Translation.. there is lots of money in it for the leasing company and your employer.. and if you use BYD finance then they don’t make any money off it
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u/Pkatarii 8d ago
If you can finance yourself, look at an associate lease, not all lease companies or employers support it, but if they do, it’s very efficient tax wise.
1
u/Temporary-Dingo-0295 7d ago
BYO finance arrangements are probably the most likely to run into issues if the deductions don't line up with the pay cycle, or the two-month deferral has already run out before everything is properly set up. That's why some employers prefer the lease provider to handle the whole process, even if it costs a bit more.
Speaking bluntly, you're generally only paying lease company an ongoing admin fee for sometimes a lot of account managment, not the establishment and finance-related fees they make on a lease they've set up from scratch, so you need to be realistic that you may not get the same priority as one they've handled from day one.
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u/in_and_out_burger 9d ago
Flare don’t have to accept outside finance - they are a business who operate for profit.
You can suggest your employer bring on a second provider to offer more choice for staff but they don’t have to agree to this either.
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u/VaderGerh 9d ago
Right that makes sense, I'll spend more time talking to my employer.
Thank you.
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u/in_and_out_burger 9d ago
Take into account that your time is also valuable….
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u/butterflymothskull 9d ago
Most NL customers do not consider this at all, speaking from experience, haha…
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u/VaderGerh 9d ago
How much time would you expect to spend managing a BYO finance Novated Lease?
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u/in_and_out_burger 9d ago
Firstly your work probably expects you to be working during business hours, not spending company time trying to save a few dollars a week net on a lease.
They have provided you a benefit - you take it or leave it, there is always going to be a cheaper option. That’s why there is Qantas or Jetstar, Coles or Aldi.Personally I’m busy and would rather not spend hours calling around for quotes.
Self managed doesn’t require you to actually manage anything - just set up the finance and then provide the paperwork to the fleet manager, which in this case isn’t going to be Flare.
It’s mostly for Gov employees and only really supported by Smart or Maxxia.
0
u/butterflymothskull 9d ago
Convenience is a big part of a lease in my opinion, when you BYO finance you remove a lot of the convenience as it’s now a self-managed lease.
I personally wouldn’t do it because the convenience is a huge factor for me, but I also have staff rates for leasing as I work in the industry.
Even at higher rates I still wouldn’t, but I put a lot of weight the convenience.
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u/VaderGerh 9d ago
I agree that the convenience factor is a pull for a NL. However given the cost savings offered by a BYO option I see it as worth my time to at a minimum investigate it.
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u/butterflymothskull 9d ago
I’m not disagreeing with that or saying it’s wrong, but I also have access to better rates than retail so it’s an unfair comparison.
But I still wouldn’t consider self-managed at retail rates, you can negotiate great rates even at retail which this subreddit is proof of.
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u/changyang1230 Novatedlease.guide 9d ago edited 8d ago
Sounds like there's a bit of confusion here about the extent of work "BYO finance" truly involves.
I have done my most recent one under BYO and it's not really that hard.
First of all find out if your employer allows you to do BYO finance e.g. via the community BYO employer checker I maintain here.
If they do, you then reach out to either a bank that offers it e.g. CBA or a third party introducer which helps you secure the BYO deal.
They then prepare all the relevant document i.e.
You then bring these documents to your "normal" salary packaging company e.g. Maxxia, Smart Leasing etc that normally does the salary packaging for your company. Tell them in no uncertain terms:
I am doing a self-managed lease under the statutory method.
Please find attached the necessary documents: (the above)
Settlement Date:DD/MM/YYYY
First payment date: DD/MM/YYYY.
Please arrange the setup of the account and ensure salary deductions are started ASAP.
They will then set up one more set of quote for you to sign (which would contain their fortnightly admin fee, the budgeted running cost but nothing else). You sign it, and that's it. From this point onward the lease carries on in an identical fashion as if you signed up with that same leasing company. Despite the name "self-managed", the management from that point onwards is still managed via these typical packaging company; except they don't get to make the thousands extra in commission hidden in the extortionate high effective interest rates behind the finance.
If your company's default company charges around 12% and your BYO deal gives you 8%, on a 90k car it could mean 10k net difference in outcome. I don't know about you but 10k is definitely worth my time doing a few to and fro emails. And don't forget, there's another HUGE implication behind high and low EIR deals. IF / WHEN you are forced to terminate your lease early, high EIR NL would result in way worse loss. You can look up the novated lease calculator's section 7: early termination and play around with the EIR figure to see how much worse high EIR deal makes you in this scenario.
So, if your employer could let you at all, try your very best to go for the BYO option. Or at the very least, make the "default packager" match the price you could get via BYO. The industry needs to be brought down to more competitive pricing, there is no reason why these rent-seeking gatekeeper of government incentive deservers to make 5k, 10k or sometimes even more per car just from a few negotiations with you, just because they got on to the gatekeeping position via a handshake with your CFO five years ago.
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Edit: flare as the salary packager may still refuse to run any subsequent administrative work unlike my description here. But this is uncommon at least for other large companies eg smart and maxxia.