Having your own car in Australia is a must, but buying one can also get very expensive. So, if you’re in the market for your first car or you’re looking to upgrade your old one, financing is definitely the first thing that comes to mind.
Now, you might think that using your savings, taking out a loan, or getting a loan from your mortgage are your only options. But have you heard about a novated lease? This type of financing allows you to drive the car you want without the headache that comes with it.
What Is Novated Leasing?
A novated lease is a financing arrangement between you, your employer, and your fleet provider. This means that you can pay for your car lease and its running costs directly from your salary. So, instead of taking out a car loan with very high interest rates, your novated lease provider will arrange for your car to be purchased by a lease finance company on your behalf, and you can make the repayments through automatic deduction from your paycheck.
Why Is Novated Leasing More Beneficial Than a Car Loan?
More Australians are now doing novated leases instead of applying for a car loan because of these benefits:
- You Can Choose Any Car That You Want
Instead of settling for a car that’s within your loan amount, you have complete control over what car you choose with a novated lease. It could be a brand-new car, a used one, or an electric vehicle—there are no limitations here.
- You Get To Save On Income Tax
One of the most enormous benefits of novated leasing is tax savings. This is because your employer will take out a massive chunk of your monthly repayment “pre-tax,” so you don’t need to pay tax on that portion of your income, lowering your tax costs significantly. Some of the costs will still be taken “after-tax” through your Fringe Benefits Tax (FBT).
- You Don’t Get Burdened By Very High Running Costs
Maintaining a car is so expensive that you just get shocked that a big chunk of your salary goes into it, destroying your budget. But when you go for novated leasing, all the running costs of your car for registration, maintenance, servicing, tyres, fuel, car wash, and electricity for electric vehicles will be spread throughout the year.
Estimate, Adjust, and Stay Covered
At the beginning of your lease, you just need to provide an estimated annual running cost for your vehicle, which will be divided into 12, 26, or 52 pay runs. You can also adjust this amount at any time during the year based on your needs. So, if you spend more than your estimated cost, your leasing agreement will still cover it.
Novated leasing is definitely a smart choice if you want to enjoy the convenience of driving your own vehicle without the headache of finding financing. So, if you’re ready to consider this option, contact our team today!