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February 12, 2014

How to Determine If Novated Leasing Will Work For You

A novated lease is a great way of financing your next new vehicle. It can also have significant tax advantages that make it a great option.

This can depend on a number of factors however, with the highest benefits coming when the vehicle is mainly used for business purposes and where you are not paying the highest rate of tax.

It’s important to compare your situation with a traditional finance option so that you can see how a novated lease package will affect you.

Lower Your Tax

The tax advantages can increase your take home pay, once you take into account the amount you would normally pay for car finance repayments and running costs. This is because your vehicle lease payments are deducted before tax is applied.

There is a fringe benefits tax component that needs to be taken into account that is reliant on the amount of business use versus personal use, although a flat rate is also available.

The Car Is Leased To You

One of the great advantages of a novated lease is that the car stays with you. It’s not registered in your employers name so you are not left without a car if you leave one job for another.

You can continue to pay the lease amount or have your new employer set up the pre-tax deduction for you. This is also an advantage for employers because they are not left with an unused vehicle, and it’s a major reason that many employers are supportive of novated leases for their employees over issuing company cars.

A New Car with No Upfront Payments

It can be hard saving for a new car when you have an older vehicle that requires major work to continue operating it.

You can enjoy a new car without a deposit when you finance your chosen car with a novated lease in Australia.

The fleet buying power that comes when the leasing company purchases the vehicle for you helps you get the best car for the lowest leasing cost.

You also have access to ongoing fleet discount rates for vehicle costs such as fuel, servicing and tyres, which will help you pay less and save more for the entire life of the lease.       

If you’re still unsure about whether a novated lease in Australia is right for you, speak to your employer or to a reputable company like Street Fleet. You’ll be able to determine within a few minutes whether it’s the right choice for you. 

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