young woman buying a car in EOFY car sales

Are End of Financial Year Car Sales Worth It?

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If you’re in the market to buy a new car, you probably know sale season hits with force in the lead up to June. End of financial year (EOFY) car sales are the talk of the town and there are usually serious bargains to be found.

EOFY car sales can be very attractive, with big savings and lots of extras thrown in. So are they actually worth it, or are there hidden catches? Let’s look at whether you should be shopping for a new set of wheels this June … or not.

Why do EOFY car sales exist?

Historically, monthly car sales volumes are about 30% higher in June than any other month. But why is that, and why are there always EOFY car sales? Most importantly, do end of financial year car sales represent a good deal or is it an advertising myth?

Yes, you can score a great deal – but you should do your homework before diving in headfirst.

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Yearly targets

Most manufacturers and dealers are keen to hit their financial year (July to June) sales goals, so might reduce prices to encourage greater sales as the year closes. Why wouldn’t they try to finish the year on a higher sales number. Even if it means a little bit of discounting.

Monthly targets

Most dealers and salespeople have targets monthly too. If the average of those across the year isn’t quite what it should be they can be extra keen to close more sales in June.

Stock takes

In addition to this, car manufacturers will often do a stock take at the end of the financial year and measure their performance against their network’s sales, revenue, and profit targets. These manufacturers often offer dealers wholesale discounts as an incentive to sell excess stock.

Starting afresh

So, EOFY car sales are essentially a result of different areas of the supply chain coming together to try and shift old stock before starting with a “clean slate” for the following year. If you’re ready to buy, this time of year can really reap rewards.

Here are some handy resources on picking the right EOFY car for you:

And speaking of starting afresh, read Why Is My Car Insurance Going Up? and think about whether EOFY is a good time for you to take another look at your insurance needs.

EOFY car sales can be great bargains

EOFY car sales for employees and business owners

Let’s say you want to buy a new car, but think you might be able to get a better tax break or other benefits by incorporating the car into your work in one way or another. Both employees and business owners often have options available to them other than just buying a car outright as an individual.

The most common of these are taking advantage of instant asset tax write offs, chattel mortgages, and novated leases.

Instant asset tax write offs

Every business owner – whether potential car buyer or not – should keep top of mind their ability to take advantage of the $150,000 instant asset tax write off scheme. This was introduced as part of the government’s coronavirus stimulus package, and has continued throughout 2023.

To take this up, the car must be in use by the end of June in order to claim the tax write off. Which is why business owners often snap up a car during EOFY car sales. Then get it on the road ASAP, of course.

This tax break is not a cash hand-out, but a deduction that reduces your taxable profit. If your business spends $100,000 on a car (net of GST) with a tax rate of 26%, you receive a 26% deduction – $26,000. The cash outlay will therefore still be $74,000.

Here are the detailed guidelines to instant asset tax write offs from the Australian Tax Office. While you’re thinking about business costs and tax, read our article: Do’s and Don’ts: Claiming Car Expenses for Business.

Chattel mortgage

A chattel mortgage is a type of business loan that you can use to buy a car or other movable asset. It’s a similar set-up to how you might buy a house with a home loan. One major consideration is that to make use of a chattel mortgage the car must be used for business more than half the time.

 A chattel mortgage:

  • Is a fixed term loan, which means there’s a set and agreed-upon time period in which to pay back the loan amount
  • The interest rate is determined at the start of the agreement and remains the same for the entire loan period
  • You borrow the money to buy the car, and you own it outright
  • The car is the security (also known as collateral) for the loan

Read more about the technical details of business vehicle finance if you’re a sole trader or self-employed.

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Novated lease

A novated lease is when you incorporate a car (and sometimes its running costs too) into your salary package as part of a salary sacrifice arrangement. This isn’t a given with every employer; only some offer it. But if yours does, you might be tempted to buy a car during EOFY sales.

The lease is a three way agreement between you, your employer, and the leasing company or financier. Most cars bought with a novated lease are new or only gently used.

How does it work?

Basically, you “borrow” the car from the leasing company and pay it off in instalments. These instalments are deducted from your salary. At the end of that lease period you’re usually left with an amount left owing on the car.

This is known as a residual balance, and can be paid off by:

  1. Starting a new lease and trading in the current car for another one
  2. Extending your lease by taking out finance on the residual balance
  3. Paying the residual balance in full

Find out more about the novated lease vs car loan decision. You’ll want to read up before you buy a car during EOFY sales. Why? Because taking a novated lease can help you to save money through tax. And we all want to save money!

Especially with the rising cost of petrol. Which reminds us… discover our thoughts on how to save on fuel costs.

Are EOFY car sales actually worthwhile?

In short, you can get a real bargain in EOFY car sales. Look into the different buying options and try to be open minded about what car you’d like. Remember that if you can’t afford it, it’s not a bargain, no matter how well-priced it is. Unconvinced? Read how to budget for a car in the new financial year.

As mentioned, because manufacturers, dealerships and their salespeople are under pressure to sell last year’s stock and meet targets, you might be able to get your hands on a really good buy. Particularly if you’re flexible and don’t mind buying an unusual colour or the previous year’s model. So if you’re in the market and can definitely afford it, end of financial year car sales can be a good opportunity to buy.

Be sure to check out these EOFY sale tips below:

Insurance for your EOFY car sale bargain

Hit up the EOFY car sales and come home with new wheels? If you’ve just bought (or are about to buy) a gorgeous new car, you’ll want insurance. Or even if you just want to insure your current car.

Taking out comprehensive car insurance offers you financial protection. After all, no matter how much of a bargain it was, you don’t want to have to buy another one thanks to damage or theft.

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