Novated leasing faqs explained

Posted on Friday, February 10, 2017 - 11:15

Contrary to the widespread opinion that novated leases are mainly dedicated to people who earn a lot, SBS opines that 70% of the people that have such a lease earn less than $100.000/year. This means that novated leases are friendly with anyone, price-wise.

What’s with all the hype around novated leases nowadays?

Yes, novated leases have become somewhat of an epidemic in the last few years, that’s true. Their omnipresence, however, has a good reason: these leases helped a multitude of people by giving them the opportunity to own a car without relying on taking loans from the banks.

Let us provide some concise answers for the most frequently met questions concerning these leases and explain it's benefits.

What is a novated lease?

Naturally, the first question that springs to one’s mind. A novated car lease is an agreement. It involves three parties: you, your employer and a lessor. Your employer leases the car on your behalf and makes the payments from your pre-tax salary. You automatically pay less tax than you used to.

Can anyone get such a lease?

Anyone is eligible for a novated lease as long as their employers agree to be a part of it. It’s a salary packaging deal, so there can be no lease without the participation of the employer.

Can I buy a second-hand vehicle?

Of course. Your consultant can even help you get the car that suits you best.

Can I trade-in a car?

Yes, there are many lessors who accept and encourage trades. The car you trade will decrease the price you have to repay the lessor.

Can I keep any insurer I want?

90% of lessors will not ask you to get their insurances, so yes, you can keep or bring your own insurance into the scheme.

What happens if I lose or change my job?

In this case, you can buy the vehicle, make the lease payments yourself or discuss the subject with your new employer.

What happens at the end of the lease?

When your lease agreement ends, you can either take a new lease or keep the car by paying the residual cash. You can even sell it if you want. As you can see, you have plenty of options to choose from.

Are the laws fluctuant for novated leases?

Not in the least. The last changes were made in 2011 by the Federal Government. There have been discussions about some new ones in 2013, but the suggested changes were cancelled.

Novated leases are real godsend gifts for people who wouldn’t afford to purchase cars otherwise. Unless one keeps on saving money for years to come, buying a new car, or even a second hand one, can be difficult, if not altogether undoable.

As long as an employer is on board with the idea, the employee is just at an arm’s reach from his/her vehicle. Have you bought your car through a novated lease? If not, would you do it?

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