Are you like me, where you thought the only way to pay for a car was to either use a bank loan, the car place’s finance option, or pay for it outright? Well, there’s another way, and it’s actually kind of genius if it makes sense for you, which it honestly might, and you didn’t even know it.
It’s called a novated lease, and it definitely sounds like something that’s only for those rich CEOs who drive Teslas. But it’s actually a way to potentially get your workplace involved in funding your car… and possibly score some decent tax savings in the process.
If novated leasing is something you’ve legit never come across before, let’s break it down.
What Is A Novated Lease?
A novated lease is way simpler than you might expect. Basically, your employer agrees to make car payments on your behalf using a mix of your pre-tax and post-tax salary. It’s an ATO-approved way to salary package your car, and providers like Oly help to set it all up between you and your workplace.
It also rolls all your driving costs ― like car payments, fuel, rego, insurance, servicing, tyres and more ― into one convenient, regular payment that comes directly from your pay. This makes paying off your car way easier because you don’t have to worry about all the additional costs that go into owning it.
No, It’s Not Just For The Corporate Big Dogs
Novated leasing sounds like something only the big earners can access. But providers like Oly work with pretty much everyone. If you run a medium, small, or even a teeny tiny business, you could be eligible.
Ditto if you don’t necessarily work full-time for your employer. Part-time and even self-employed folks with a steady income can be eligible, depending on circumstances, so don’t write yourself off just yet.
It Could Be A Real Tax Win For You
Because part of your car payment (and eligible running costs) comes out of your before-tax salary, you can actually end up lowering your taxable income, which could reduce the amount of tax you pay. That means you might end up with more disposable income in your pocket than you would if you paid for the same car outright.
It gets even more interesting with eligible electric vehicles. Sometimes, the entire payment can come from your before-tax salary, which could mean even more potential savings.
You Do Get To Own The Car
Sometimes people avoid novated leases because they feel like the car isn’t really owned by them. But this isn’t always the case. At the end of your novated lease, you have options. You can pay the residual amount and own the car outright, for example. Or you can pay the residual and then upgrade to a new car, if you feel like something snazzier. Finally, you can refinance the residual and keep driving the car.
Basically, it’s not about renting forever. You’ve got options!
There Are Some Really Good Savings To Be Had
There are savings beyond the potential tax win, too. Novated leases usually involve no deposit, no upfront GST on the car, and no GST on most eligible running costs.
And don’t forget that one neat payment each month. That means no shock rego costs, no hectic servicing costs you’ve got to find the cash for. It streamlines all of that, which can be a real benefit if you need to get your budget under control.
Still Sound Confusing?
That’s OK! That’s what providers like Oly are here for. They’re holding your hand the whole way.
Instead of you struggling through all the finance terms and giving up on the whole idea when you get too confused, they break it down for you. They’ll help you determine if novated leasing is right for you, and if it is, help with setting it all up with your employer, too.
Novated leasing won’t be for everyone, but it’s also more accessible than you might think. It’s worth a chat, no?
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