The cost-effective alternative to buying a vehicle for the employee

If you’re one the lucky few, you will have the money to be able to buy a car outright. The reality is, most people opt for a loan from the bank when it comes to buying a car. However, there is a better option when it comes to financing your vehicle, and it’s called a novated lease.

More and more Australians are choosing this option for the many benefits it provides.

Simply put, a novated lease is a financially binding agreement between a full-time employee, their employer and a car lease financier. Under a salary packaging contract, the employee chooses a vehicle they wish to lease from a reputable car dealership, and then the employer funds the monthly payments directly from the employee’s pre-tax income.
Here are 5 ways that a novated lease can benefit you, the employee:

1. Savings: As the payments come out of your pre-tax income, you can save money by having a lower tax rate. These deductions will reduce your income tax.
2. Control: You have complete control of your car, in that you can use it for business or leisure
3. Flexibility: If you leave the company before your lease has ended, you can take your vehicle with you. As part of your next remuneration package, your new employer can pick up the lease agreement
4. Choice: You get to decide on the make and model of your vehicle that suits your requirements, such as a sports car for the single or a big sedan for the family
5. Service: You can pay for the running costs such as petrol and general maintenance from your pre-tax income!

It is easy to see why the novated lease has become an increasingly popular option over the years. From having the car for unrestricted use through to saving on the running costs, this financial agreement can even satisfy employers as well. If you’re on the market for a new car, consider a novated lease. Ensure you do your research first to determine if it is suitable for you.