The Ultimate Guide To Novated Leasing
What Is A Novated Lease?
A novated lease is a type of vehicle lease offered by employers as a part of your salary package. It is a financial arrangement wherein the employer pays for the car and its running costs from your pre-tax earnings and post-tax salary deductions.
A novated lease can help you save thousands of dollars on the car’s purchase price and maintenance.
Popular Novated Leasing Companies
Maxxia
Maxxia is the largest provider of employee benefits in Australia and is part of the ASX-listed McMillan Shakespeare Group, which started the salary packaging in the country in 1988.
RemServ
RemServ is a leading provider of salary packaging services in Queensland and has 21 years of operation.
NLC Novated Lease
NLC is part of the SG Fleet Group Company, which is the leading provider of vehicle solutions, vehicle leasing, and salary packaging across Australia.
Fleetcare
Fleetcare is an independently-owned company that operates nationwide with over 42,000 vehicles for private, public, commercial, and industrial purposes.
Smart Salary Novated Lease
It is one of Australia’s largest salary packaging companies that service more than 200 organizations, including large corporations, major healthcare groups, and government institutions.
Statewide Novated Lease
Statewide Novated Leasing Pty Ltd is a novated leasing services provider of Queensland Government employees for 18 years now, as approved by the Queensland Government.
SG Fleet Novated Lease
SG Fleet is a leading international mobility solutions provider that employs over 700 staff, and manages over 140,000 assets.
Autopia Novated Lease
Founded in 2004, this novated leasing company has been helping individuals and organisations save money by helping them buy, sell, and use vehicles using the most tax-effective ways.
RACV Novated Lease
RACV Finance has wide range of car finance options that allow quick and easy application for car loans. It also operates in the transport, home, travel, leisure, and retail sector.
Orix Novated Lease
It is a publicly-owned global financial services company found in 1964, which a headquarters based in Tokyo. It has $1.5 billion assets and 325 employees across Australia and New Zealand.
Fleet Partners Novated Lease
For almost 30 years, they have been providing fleet management and vehicle novated leasing to clients. As of now, they have 55,000 vehicles on the roads of Australia.
With almost 30 years of experience in vehicle leasing and fleet management, we keep more than 55,000 vehicles on the road across Australia.
Stratton Novated Lease
It is a publicly-owned global financial services company found in 1964, which a headquarters based in Tokyo. It has $1.5 billion assets and 325 employees across Australia and New Zealand.
Popular Novated Lease Car Brands
Toyota Novated Lease
The novated lease offered by Toyota Fleet Management has a simple application process that takes only 5 working days. TFM is an expert partner in fleet management, fleet management, and other transport needs. They have a direct access to Toyota Finance, the parent company that provides funding, which means you can get competitive rates and great deals.
BMW Novated Lease
BMW Finance can assist to in acquiring a new BMW fast, in the most tax-effective way. BMW experts have created solutions that meet your individual needs. To help customers save more, they do not charge accounting fees. For almost 50 years, they have been at the forefront of automotive finance around the world.
Mazda Novated Lease
Mazda Finance offers flexible payment options for individuals and organizations. They tailor the interest rate as they calculate your individual circumstances. MF is noted for transparency and personalized customer care. They offer loans ranging from 12 to 72 months in length, subject to company policy and approval.
Audi Novated Lease
For more than 65 years, Audi has made automobile financing and leasing flexible, efficient, and simple. They also offer finance solutions that are tailored to your budget, lifestyle, and credit score. Their fleet leasing solutions covers vehicle sourcing, price negotiation, procurement, delivery management, and maintenance management.
What Are The Advantages Of Novated Lease?
Post Tax Salary Benefits
Novated leasing allows you to save a lot of money through post-tax salary benefits. This means your employers pays for the car and its running costs through your pre-tax earnings.
Warranty
Vehicle models under novated lease are covered by warranty. This means you won’t have to worry about repairs and maintenance. You can even upgrade the vehicle before or at the end of your lease.
Convenient
Most novated leasing companies handle the procurement, registration, maintenance, and other services to lessen the customer’s burden. Some even offer 24/7 roadside assistance.
What Are The Disadvantages Of Novated Lease?
The Vehicle Is A Liability
Unlike a company vehicle that can be returned after your service, the car goes with you when you part ways with an employer. This means all the financial obligations are yours.
Employer Approval
Since a novated lease is a 3-way agreement, you need to get the approval of your employer for the vehicle that you want to buy or lease.
Requires Outstanding Credit Score
With all the advantages that a novated lease has to offer, finance companies practice extreme caution when approving clients.
Novated Lease vs Car Loan
Unlike novated lease, the maintenance and running costs of cars acquired through a lone are carried by the owner from your post-tax earnings. But with a novated leasing company, you can get the car at lower price through their connections and budgeted running costs. It can also be difficult to sell the car later on without the help of a well-connected finance company.
Novated Lease vs Buying Outright
A novated lease is a more practical option if you’re constantly travelling with a huge mileage, as it offers easier budgeting for repairs, maintenance, and fuel—and they are all part of your pre-tax payments. And because the car is acquired through a 3-way agreement using your pre-tax earnings, you can save more through a novated lease than buying the automobile outright.
Novated Lease vs Chattel Mortgage
A chattel mortgage is advised if the vehicle is for daily business us so that your business can claim back the purchase and running cost. Although this type of mortgage gives you the ownership from the beginning, offers substantial tax deductions, and flexibles options, you have to pay for all the maintenance and running costs.
Most popular questions
Fringe Benefits Tax (FBT) is a type of tax paid by the employer on certain benefits they provide the employee with.
With a novated lease, your employer pays a portion of the car payments from your pre-tax salary. This means a portion of your salary before it enters your and goes to your car-related expenses. This also effectively reduces your income tax.
The interest rates vary depending on several factors, mainly the price of the vehicle. Interest rates on novated lease in Australia can reach up to 10%, and are generally between 5% and 7.5%. But without a middle man, the interest rates through this finance option is better.
A Fully Maintained Novated Lease is a type of salary package that includes a car and its running costs. In this lease, the employee acquires the car and assumes the financial obligations by paying its monthly costs using the employee’s pre-tax earnings.
Sadly, there are finance companies that will try to trick you with the prospect of huge savings but actually has shady doings. Some of them has unclear terms and conditions, surprise charges, and excessively high penalties.
A salary sacrifice novated lease is a finance options that allows you to pay for a new or used automobile of your choice using a pre-tax salary.
Having an outstanding credit history is vital to get approved for a novated lease. Delayed payments and unpaid debts can risk your chances of getting approved for a novated lease.
The residual value is the final amount that represents the value of automobile at the end of the lease, as determined by the ATO. A 5-year lease has a minimum residual value percentage of 28.13% as set by ATO.
If you want to own an automobile in the most tax-effective way, simply contact Novalease! We offer a wide payment options, flexible payment terms, transparent processes, and professional customer care drawn from our years of experience in field of vehicle leasing.