Myths of Novated Leasing Exposed
Leasing a car with an option is one of the wisest and most cost-effective methods to acquire a vehicle.
Our clients save thousands on the purchase price of their automobile, as well as tax and GST. Our customers simply select the vehicle they want and use pre-tax salary for repayments before driving. Is it true that it sounds too good to be true? It isn’t. Here are some of the myths about novated leasing debunked!
Myth #1 – You don’t own your vehicle.
Yes, you can. Many automobile purchasers are put off by the word leasing because it reminds them of renting a house rather than owning their own home. Novated Leasing is simply a type of financing that lets you purchase and operate your vehicle for less money, lowering both your financial strain and tax burden. Your car is officially registered and insured in your name, and you do not have to return it at the end of the lease.
You have three options at the conclusion of a lease:
- Upgrade to a new automobile and turn it into a lease.
- You can refinance the residual and extend your car lease to a longer duration, which reduces your payments significantly.
- Take the vehicle and pay off what you owe.
Myth #2: I’m only allowed to lease a new car.
Not only is novated leasing applicable to new car purchases. You may use a novated lease on a previously owned automobile, or even establish a lease agreement with your current vehicle through the ‘sale and lease back’ method.
A ‘sale and leaseback is a type of novated leasing in which you can keep your car. A company will collaborate with you to establish a fair value, pay off the outstanding loan, or receive a lump sum of money from the equity in your automobile if you own it. You may then benefit from the convenience and potential tax savings.
You might be able to lease more than one vehicle at once, depending on your employment policy, allowing the entire family to benefit.
Myth #3: I don’t make enough money.
Novated leasing allows employees of all income levels and pay scales to benefit. With the reduced selling price on your vehicle, as well as savings on the GST, you can start saving right away. You may get significant fleet discounts before you drive thanks to our country’s vast purchasing power.
All of these factors need to be considered when determining the cost of a car. In addition, you’ll have to consider running and upkeep expenditures, registration fees, petrol, servicing, tyres, and comprehensive insurance. All of these expenses are GST-free and are deducted from your pre-tax income as part of a fixed monthly payment that is reasonable.
You save money on taxes while still driving a car that is worth less than what you owe.
Myth #4- I don’t do enough km to profit from it.
In 2014, the tax laws changed. You may now benefit from car tax savings regardless of how many kilometres you drive each year. And since your running costs are based on how much you drive, you only pay for what you consume.