With a novated lease comparison, you make vehicle payments out of pre-tax salary dollars, reducing your taxable income and increasing your disposable cash. It also allows you to access fleet discounting on many makes and models of cars.
It also saves your employer Fringe Benefit Tax (FBT) money and helps to keep their payroll taxes low.
A novated lease is a great option whether you’re looking to buy a new or used car. A car finance arrangement allows you to bundle your purchase price, interest and running costs into one payment, which is deducted from your pre-tax salary.
Novated leasing is a tax-effective way of buying and maintaining your car, as it is considered an employee benefit. It does not require you to use the car for work-related purposes, which means it is a great alternative to getting a loan.
Tax savings
Novated leases are becoming increasingly popular in Australia, and for good reason. They offer numerous financial benefits to help you save money and achieve your goals. However, it’s essential to understand the pros and cons of this financing option.
The basic idea behind a novated lease is that your employer takes money from your pre-tax salary to pay for your vehicle and its running costs. It reduces your taxable income and, in turn, cuts your income tax bill. The savings from a novated lease can be significant, especially for those on higher marginal tax rates.
In addition to the finance lease, novated leases usually include other car expenses, such as servicing, fuel, registration, tyres and breakdown assistance. This bundles costs and can provide cost savings compared to individual expenses management. Moreover, many novated lease providers negotiate fleet discounts and pass these on to their employees, increasing the potential for cost savings. Careful budgeting and financial planning are essential to maximise these benefits. A qualified accountant can assist with this process.
Flexibility
With novated lease comparison, you can choose any vehicle to purchase, new or used. You can also select a fully maintained lease or a self-managed lease. Your novated leasing provider will help you determine which option is best for your needs and budget.
You can save even more money on running costs by bundling them into your novated lease payments. It includes things like fuel, insurance, registration and tyres. It will allow you to get a car you may not have otherwise been able to afford.
A key benefit of novated leasing is that you can take your agreement with you if you change jobs. It is a big advantage for self-employed people or having multiple jobs.
You can learn more about the benefits of novated leasing by speaking to one of our expert consultants. You can also request a free, no-obligation quote to see how much you could save. It only takes a few minutes and is completely free of charge. You can also compare novated leasing with other forms of vehicle finance, such as chattel mortgages and low-doc car loans.
Convenience
Novated leasing can offer an excellent way to get behind the wheel of a new car without the hassles of paying for it out of your pocket. However, it’s important to weigh the pros and cons carefully and ensure your novated lease aligns with your long-term financial goals.
Through novated lease comparison, your fuel, servicing, insurance and roadside assistance are included in one smooth monthly payment. It creates a budgeted, stress-free arrangement and saves you time and money in the long run.
At the end of your novated lease, you can buy the car outright (paying what’s known as the ‘residual value’) or trade it in for another vehicle. If you trade the car in, the residual is paid off, and the profit (up to the residual value) is tax-free.
Employers also stand to gain by introducing a novated lease program, as it reduces payroll tax and can position their business as an employer of choice amongst employees. That means they can attract and retain valuable staff more effectively and potentially save on wage costs.