My Novated Lease Business Idea
This is an idea I had last night while trying to get to sleep. As far as I am aware nobody is doing this, so this is 100% my thoughts and ideas.
Before I tell you about the business idea, I'd like to share a little back story first. You see, the wife and I have been looking for a new second-hand car to buy for the past few months, some of you may even remember my thread asking for people to take me under their wing if I paid them a certain fee. Well that was because we were (and still are) in need of a new car. So we have been searching the Internet and all the used car sites here in Australia long with asking around, looking through newspapers, etc. But until yesterday afternoon we had not found anything that suited our family. My wife finally found something that we both liked and was in our price range, and the best thing is it suits us perfectly. While looking through the pitch the owner put up, I noticed that he said that car was under a novated lease. Now I had heard of leasing cars before, but had never heard of the term novated lease. So I asked the wife if she knew and indeed she did. So for anybody else who doesn't know what it means is this:
When you buy a car you have several options of how you wish to pay back any loan that you take, one of them being the novated lease. While you own the car you must make on time payments and keep the car serviced at certain intervals to keep it in tip top condition. At the end of the loan term you can upgrade to a newer model car and whatever is left owing on the loan will be brought forward onto the new loan of the new car. Also, if you decide to sell the car during that term, you can only sell it for the amount that is left owing on the loan. So for example you may have borrowed $45,000 over a term of 7 years, and 6 years in you decide you want to upgrade to the newest model. But instead of going the novated lease way like you did last time, you want to sell the car first. You have $12,000 left owing on the car, so that is all you can sell the car for.
So after thinking about this for a while last night, I came up with a way you legitimately make money with buying and selling cars that have previously been under a novated lease agreement. So here is what I came up with.
You search online car yards, ebay, newspapers, anywhere that you would normally look when buying a new second-hand car. But you only want to buy cars that have been in a novated lease. Now you will need to have an up-front investment with this business model to buy the car in the first place, so you could always start out buying cars that are within your budget before you can afford to buy cars with a higher price tag.
Then you are free to re-sell the car at a much higher price and make a whopping profit.
Using the previous example, someone buys the car you want to sell for $12,000. But in the open market, other cars of the same make and year model are selling for $20,000. So to make your car the better choice to anyone looking for a new car, you sell it for say $18,000. $2,000 less than your competitors, but you still rake in a nice $6,000 profit. Depending on how old the car is and what make and model it is, you could sell a car within a week or two. Do this a few times and you could start to make $20,000 - $30,000 a month.
Before I tell you about the business idea, I'd like to share a little back story first. You see, the wife and I have been looking for a new second-hand car to buy for the past few months, some of you may even remember my thread asking for people to take me under their wing if I paid them a certain fee. Well that was because we were (and still are) in need of a new car. So we have been searching the Internet and all the used car sites here in Australia long with asking around, looking through newspapers, etc. But until yesterday afternoon we had not found anything that suited our family. My wife finally found something that we both liked and was in our price range, and the best thing is it suits us perfectly. While looking through the pitch the owner put up, I noticed that he said that car was under a novated lease. Now I had heard of leasing cars before, but had never heard of the term novated lease. So I asked the wife if she knew and indeed she did. So for anybody else who doesn't know what it means is this:
When you buy a car you have several options of how you wish to pay back any loan that you take, one of them being the novated lease. While you own the car you must make on time payments and keep the car serviced at certain intervals to keep it in tip top condition. At the end of the loan term you can upgrade to a newer model car and whatever is left owing on the loan will be brought forward onto the new loan of the new car. Also, if you decide to sell the car during that term, you can only sell it for the amount that is left owing on the loan. So for example you may have borrowed $45,000 over a term of 7 years, and 6 years in you decide you want to upgrade to the newest model. But instead of going the novated lease way like you did last time, you want to sell the car first. You have $12,000 left owing on the car, so that is all you can sell the car for.
So after thinking about this for a while last night, I came up with a way you legitimately make money with buying and selling cars that have previously been under a novated lease agreement. So here is what I came up with.
You search online car yards, ebay, newspapers, anywhere that you would normally look when buying a new second-hand car. But you only want to buy cars that have been in a novated lease. Now you will need to have an up-front investment with this business model to buy the car in the first place, so you could always start out buying cars that are within your budget before you can afford to buy cars with a higher price tag.
Then you are free to re-sell the car at a much higher price and make a whopping profit.
Using the previous example, someone buys the car you want to sell for $12,000. But in the open market, other cars of the same make and year model are selling for $20,000. So to make your car the better choice to anyone looking for a new car, you sell it for say $18,000. $2,000 less than your competitors, but you still rake in a nice $6,000 profit. Depending on how old the car is and what make and model it is, you could sell a car within a week or two. Do this a few times and you could start to make $20,000 - $30,000 a month.