If you’re an employee considering a novated car lease with your employer, you may be wondering what the benefits are. What’s in it for you and why is it better than traditional forms of car finance?
Well, wonder no more! In this blog, we provide a breakdown of the benefits of novated leasing in 2018. Don’t rely on hearsay - read our quick and easy summary - and decide for yourself.
What Is A Novated Lease?
A novated lease is a three-way agreement between yourself, your car financier and your employer. We liaise with your employer and arrange for the finance and running costs (insurance, fuel etc.) to be deducted from your pre-tax salary. At the end of the lease, you decide whether to buy, sell or upgrade the car.
It’s a tax effective car financing arrangement that is also known as ‘salary sacrificing’ or ‘salary packaging’. Want to learn more about novated leasing? See our blog “Novated Leasing, How Does It Work?”
1. Cost and Post-Tax Savings
The biggest advantage by far is the pre-tax payments! Because the lease payments are taken from your gross salary, you can save on income tax putting more money in your back pocket. You also don’t pay GST on the car purchase price or most of the running costs! According to our research, this creates an average saving of $4,132 per year for novated leases, compared to traditional car financing.
2. Easy Loan Payments
Novated leasing is the ultimate ‘set and forget’ vehicle financing agreement. All the costs of running your car (insurance, fuel, registration, servicing and tyres) are taken care of in regular payments that are deducted from your salary. This also makes budgeting and day-to-day financial planning a lot easier.
3. Vehicle Options
Both new and used vehicles can be purchased via a novated lease (with some age restrictions on used cars). If budget allows you can also lease more than one car in a family. The choice is yours.
4. No Vehicle Restrictions
Because the car is your personal asset there are no restrictions on how you use the car.There are no minimum kilometres that need to be travelled each year, we just ask for the likely kilometres to help determine the annual running costs of the car. At the end of the lease, you have the choice to refinance or pay out the residual, and sell, upgrade or own the vehicle!
All our customers have access to great discounts on vehicle-related expenses such as servicing, tyres and insurance, through our preferred suppliers. At beCarWise, we package all your running costs, so you can capitalise on convenience and savings. We also supply a Fuel Card to make filling up easy.
6. The Lease Can Move Jobs With You
Because the car is yours and not a company car, should you decide to change jobs the lease can potentially be moved over to your new job. Just ask your new employer if they offer novated lease deductions through their payroll, and it can easily be transferred over. Alternatively we would discuss payout options with you.
So there you have it! Those are the main benefits of entering into a novated vehicle lease. Are you an employer and want to know more about the benefits of offering novated leases to your staff? Discover our ‘Novated Leasing for Employers’ page. Want to know about the other types of car finance beCarWise offers? Read up on our blog ‘Which Car Finance Is Right for You?’ Otherwise, good luck with your car loan search, we hope this article helped!