Novated leasing is becoming more popular in Australia. Many Australians see it as a smart way to save money when buying a car. But what exactly makes it so appealing?
We know that understanding novated leases helps you make the best choice for your situation. This guide aims to build your knowledge by listing some key benefits of getting a novated lease in Australia.
What's Novated Leasing?
Simply put, novated leasing is a type of car salary packaging. An employer and employee agree to let the employee use part of their pre-tax salary to pay for a car. These payments cover not just the car's purchase price, but also its running costs.
Money-Saving Benefits of a Novated Lease
Tax Cuts
A big plus of novated leasing is the tax breaks you can get. By packaging your salary, you pay less income tax because car payments come out before tax. This can leave you with more money for other investments or just extra cash in your pocket at the end of the tax year.
You can also save on Fringe Benefits Tax (FBT) – a tax employers pay on some employee perks. Last year, the Australian government announced an FBT exemption for electric cars, making this benefit even better.
Regular Payments
With a novated lease, you can set up consistent payments. This helps you manage your taxable income better by arranging regular payments that work for both you and your employer. It also makes budgeting easier because you know how much after-tax income you'll get.
Car Ownership Perks of a Novated Lease
Freedom to Choose Your Car
A novated lease lets you pick from many different car makes and models. You're not stuck with just one option, so you can find the perfect car for your needs.
You don't have to worry about a car being too expensive to buy outright. A novated lease company can help you get the car you want for less.
Use Your Car How You Want
Some salary package or lease deals – and many standard car loans – only let you use the car mainly for work or personal use. Novated leases let you use the car however you need, giving you the freedom to enjoy your car your way.
Upkeep Benefits of a Novated Lease
All-in-One Maintenance and Service Deals
Novated leasing companies often offer packages that cover key maintenance and service needs. These can include car servicing, oil changes, registration fees, and other car ownership costs. This means you have one point of contact for all your car needs, making it easy to track expenses and ensure all necessary checks are done on time.
Cheaper Fuel and Running Costs
Novated leases also offer better deals on fuel and other car running costs. When you bundle all your car-related expenses, you can save more on refueling. This is especially true if the novated lease company offers discounts or rewards for certain petrol stations or services.
Work-Related Benefits of a Novated Lease
Boost Employee Pay Packages
If you want to attract skilled employees, a novated lease can be an extra incentive. It adds value to employee pay packages, helping you compete for top talent in your field.
Being able to offer your employees a fully maintained novated lease – if they want one – can greatly increase the number of responses you get to job ads.
Happier, More Loyal Employees
Including a novated lease in an employee's pay package can also improve job satisfaction and keep employees around longer. Knowing they're getting the most out of their wage through tax savings, and having access to cheaper fuel or car maintenance, also boosts morale and productivity at work. This benefits both the employer and employee.
Get the Best Deal from the Right Novated Lease Provider
There are even more great benefits to a novated lease that we couldn't fit in this article. But it's clear that a novated lease can be a great alternative to a standard car finance or car loan agreement.
To make the most of these benefits, it's crucial to choose the right novated lease provider. Look for a company with a good track record, competitive rates, and excellent customer service. They should be able to explain all the details of the lease clearly and help you understand how it fits into your overall financial picture.
Remember, while novated leasing offers many advantages, it's not the best choice for everyone. It's important to consider your personal circumstances, including your job stability, financial situation, and long-term plans. If you're unsure, it might be worth talking to a financial advisor who can help you weigh the pros and cons.
Also, keep in mind that tax laws and regulations around novated leasing can change. Stay informed about any updates that might affect your lease. Your novated lease provider should be able to keep you updated on any important changes.
Lastly, don't forget to read the fine print of any novated lease agreement carefully. Make sure you understand all the terms and conditions, including what happens if you change jobs or want to end the lease early.
In conclusion, novated leasing offers a range of benefits that can make it an attractive option for many Australians. From tax savings and flexible car choices to bundled maintenance packages and potential work perks, it's worth considering if you're in the market for a new car. Just be sure to do your homework, choose a reputable provider, and make sure it's the right fit for your individual needs and circumstances.
With over two decades in car leasing, Alliance Leasing applies their extensive knowledge to maximize your novated lease benefits. Our diverse vehicle selection features flexible contract terms and various body types to suit your needs.
Ready to start your novated lease journey? Contact us today to learn more about how we can help you get the best deal possible.
