What is a novated lease?
More Car, Less Tax: The Smart Way to Finance Your Next Ride!
What is a novated lease?
Novated leasing is a type of salary packaging arrangement in Australia that allows employees to finance a car using a combination of their pre-tax and post-tax salary. It involves an agreement between the employee, their employer, and a leasing company.
The employer makes lease payments on behalf of the employee using pre-tax earnings, which can reduce taxable income and provide potential tax benefits, including GST savings on the vehicle purchase price and running costs.
Novated leasing can be a cost-effective way to own and maintain a car while taking advantage of tax efficiencies.
How does a novated lease save me money?
As payments come from your pre-tax salary, you can benefit from tax savings and avoid paying GST on the purchase price of the car, which can lower costs by up to 10%.
Additionally, because expenses are bundled into a fixed payment, budgeting becomes easier, and you may get fleet discounts on servicing and running costs.
What is the difference between a novated lease and a regular loan?
A novated lease is paid out of your pre-tax salary, making it potentially more convenient than a regular car loan. Learn more about the difference between a novated lease and a car loan here.
Is a novated lease worth it?
Tax Benefits
Payments are deducted from your pre-tax salary, reducing taxable income and avoiding GST on the purchase.
Lower Costs
Typically lower monthly payments and minimal upfront expenses.
Easy Management
Your employer handles payments, reducing the risk of missed payments or defaults.
Better Car for Less
Access to higher-quality or more expensive vehicle at a lower cost.
Warranty Coverage
All vehicles come with a warranty, offering potential savings on future repairs.
Potential for Upgrade
At the end of the lease term, you may have the option to upgrade to a new car, refinance, or buy the car outright.
Learn more about what happens at the end of your lease here.
Am I eligible for a novated lease?
Typically you may be eligible for a novated lease if you meet the criteria below:
- Employment: Permanent full-time/part-time job with an employer that offers salary packaging.
- Income & Credit: Sufficient income, good credit score, and financial stability.
- Eligible Vehicle: Must meet lender requirements (age, price, usage).
- Residency: Usually for Australian citizens or permanent residents.
How it works
Using a broker for your finance needs allows you to compare lenders and find a product that suits your circumstance. Reach out to the team to find out we can guide you through the process.
Try our tools
We understand that getting finance can be a scary thought, which is why we have a raft of tools to help you navigate the novated lease landscape – or, simply reach out to the team at Positive Lending Solutions.
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