Did you know that you could end up with more dollars in your pocket with a novated lease compared to buying it with cash or regular finance?
Using normal finance you pay from your salary after tax. With a novated lease you salary package the car and make the payments before tax.
The alternative is to wait until you can save enough cash for the car you want. But saving is hard. Expenses always eat into your precious savings which means you’ll need to wait longer for a new set of wheels.
All you need to do to take advantage of this legal (and easy) way of reducing your tax bill is to work for a company that offers salary packaging as an employee benefit. If it’s not currently available then ask about setting it up so you can access the savings.
What’s the difference between owning a car and a novated lease?
The first thing is the running costs are paid from your salary before the tax is taken out. This reduces your income which also reduces the tax you pay.
What do we mean by running costs?
Well, the obvious one is fuel. You also have servicing, finance costs and insurance. When they are included in the lease, the financier claims the GST input tax credit which is like you getting a 10 percent discount. And with a novated lease all the expenses are combined into one monthly rental which makes budgeting easier.
When’s the best time to buy a new car?
The last weekend of the month is a great time. Car dealerships have targets to hit and the end of the month is a great time to do a deal. Not every dealer will play the game so shop around to get the best price.
Another good time is at the start of the year. Manufacturers often provide incentives to sell the cars that were built in the previous year.
Buy the top model in the range
With a novated lease you pay a monthly rental depending on the length of the lease (36, 48 or 60 months) so the cost for a model upgrade is spread across the term of the lease so you can enjoy the luxury without the upfront payment.
Can I get an electric car in my novated lease?
Yes! The Federal Government introduced a new policy in 2022 to encourage more businesses to add electric cars to their fleets. The benefits also apply to a novated lease. There’s more details in the section on electric vehicles so take the time to find out more.
For more information download a copy of the 2024 Car Leasing Guide.
