Novated leasing works when a lender facilitates an arrangement between you and your employer so you can divert some of your pre-tax salary towards buying your car and the costs of running it, which could mean considerable savings for you. You can benefit even if you don't own a business, only want the car for private use and have a low annual mileage. You could also use a novated lease to buy a used car, and you can take advantage of one whatever your level of taxable income.
Why do people use novated leasing?
Saving money is the primary goal of most car buyers, and if you're saving tax at the same time, then it may well be worth exploring your options with lenders and your employer. When an agreement is set up between the three parties, your employer will make salary deductions (known as salary packaging or salary sacrifice) for your regular lease payments that will be a combination of your income pre-tax and post-tax.
What are the main features of a novated car lease?
Novated leasing means you can get the car you need while also paying less tax. You can get your car running costs bundled into the lease deal, so as well as the purchase price, your single salary deduction can include fuel, insurance, servicing, tyres and even roadside assistance. You can maximise your tax savings and cut out the hassle when you have to budget for your running costs. As with any form of car leasing, you should compare the options available and be comfortable about interest rates being charged, any fees or hidden expenses in the package, and that you can afford to have a part of your salary taken as a repayment every month.