Frequently Asked Questions
Novated Leasing General F.A.Q
Does everyone save thousands via leasing a car?
Yes, everyone has the potential to save thousands per year or over the term of their lease. However each person is different based on their salary, car expenses, state of residence etc. Your best option is to contact us for a free quote on the motor vehicle you are looking to lease.
You can also view your approx savings via our Novated Lease calculator.
Can I gain the savings through a Novated Lease if I own my car or have a personal loan on it?
The whole point of leasing a motor vehicle is to gain the pre-tax savings. Now if you have just financed your new car through a loan before discovering the benefits of leasing or indeed own your car outright, you can switch to leasing.
With your new car currently under finance we can arrange to pay this loan out as long as the value of your car does exceed the amount owing. Then we arrange a Novated lease for you. If you own the car outright, our financier simply purchases your car at an agreed market value and you lease it back.
Am I allowed to use my preferred motor vehicle insurance company?
While we do offer an insurance package, we also encourage you to contact your insurance company (maybe you have insurance on house and contents) to see if they will offer you a discounted rate. After all we are here to help you save money!
If you choose to use your own insurance company, you will need to let us know so that 1. we can add it to your Novated Lease budget and 2. when you pay the renewal you will need to submit a claim to us for reimbursement.
Do I have to use your roadside assistance product?
Not at all. Everyone has different preferences. Just like your car insurance though, we need to budget this cost in if you choose your own roadside assistance product and you will need to send a claim in so we can reimburse you.
I am casual will this affect me getting a Novated Lease?
Unfortunately, the short answer is yes. You do need to be working full-time and we do advise on a minimum salary of $50,000 per year. We have no desire to place people under any financial burden and we are not in the business of selling cars. Our entire focus is on helping people save money that enhances their financial situation.
If you have been told you can be given a Novated Lease and you earn well under our bench mark, please seek a second opinion.
You mention I can still gain savings even if I drive low Kms each year, is this correct?
That is correct. The FBT (Fringe Benefits Tax) has been changed to a flat statutory rate of 20% of the vehicle value regardless of the number of kilometres you drive per year.
What happens to my lease if I decide to leave my employer for a new job opportunity?
If you choose to leave your current employment you can take your Novated lease to your new employer as it is totally portable. If your new employer does not offer salary packaging, we will contact them to explain all the benefits and help them setup our Novated Lease solution so you can continue to enjoy the tax savings.
Is there any residual or balloon payment at the end of my lease?
Yes, there is, and this has been set down by the ATO. You also need to remember the car is owned by the leasing company however the lease is in your name.
Two months prior to your lease term ending your leasing company will contact you with an offer for you to pay out this residual amount before the ownership is transferred to you, a common option for those retiring.
Another option, should you love your car and not ready to purchase a new one, you may choose to re-lease your balloon payment to keep gaining your tax benefits. Having 2 months’ notice, most people choose to sell their car to either cover the balloon payment or if structured correctly sell the car for a little more than what’s left owing, pocketing the profit, then lease a brand-new car. Of course, you can also pay out the balloon payment and hand the car over to your children !
What is the best term to run my lease for?
It really comes back to your personal preference and you can choose between a 1,2,3,4 or 5 year lease term. We will have a discussion with you around this very subject, as 5 years can be a long time in your life.
Because a lease agreement is essentially a “rental” agreement you do not have the option of “paying it out early” like standard loan contract if your circumstances change. Under a Novated Lease you MUST pay the entire number of contracted lease payments including the last residual payment.
You may be tempted to choose a 5 year lease term, we would probably recommend a 3 year term knowing that you can always extend it for another 2 years if you so choose at minimum additional cost.
Am I allowed to make any modifications to my motor vehicle?
As long as you are not turning your car into a street machine yes you can. Please note though, any modifications are not claimable against your lease. You also must ensure the motor vehicle remains 100% street legal. We also advise you check with your insurer to ensure modifications do not alter your policy should something happen to your car!
Can I lease a 2nd hand car?
Yes, you can however, with a Novated Lease and leasing used cars you need to ensure the car is no older than 9 years at the end of the lease term. If you are unsure, please contact us so we can go through this option with you.
You mention I receive a Motorpass Charge Card, how does this work?
With your Novated Lease, most of your running costs, i.e. fuel, tyres, servicing, any maintenance costs, even washing your car can be paid via your Motorpass card. All these costs have been budgeted into your fully maintained lease. Remember, given you will now NOT be paying GST on the above costs, plus paying these costs pre-tax, many people are effectively only paying around 0.88 cents per litre for their fuel!
How long will it take to receive approval on a Novated Lease for my new car?
From the time you request a quote and we go through the approval process, normally only takes 3 days. It’s rare that you can walk into a dealership and walk out the same day with a brand new car. Most times the dealership will need to add any extras you want such as tinted windows or alloy wheels and this can take up to a week depending on how busy they are. Other times the dealership may have stock still waiting to come in which can take up to 2 weeks.
On your example Novated Lease comparison I see ECM what does this mean and can you explain the FBT part?
Keeping it simple, FBT is Fringe Benefits Tax. This is applied to benefits you receive from your employer. Benefits that are not cash salary or wages. E.G your Novated Lease is classed as a benefit outside of your salary which therefore attracts an FBT.
That being that a flat statutory rate of 20% applies, regardless of the distance travelled, to all car fringe benefits provided from 1 April 2014 (except where there is a pre-existing commitment in place before 7.30pm AEST on 10 May 2011 to provide a car).
Next, Employee Contribution Method (ECM) this amount is your post tax contribution which is designed to eliminate any FBT liability on you and your Employer, i.e. the FBT purchase value of your new vehicle is $25,000, (25,000 x 20% = $5,000 ECM) You are paid fortnightly, therefore $192.30 will be deducted post tax each pay day.
How do we implement the payment solution for Novated Leases?
Our team will guide your HR or payroll office staff through the procedure and also send them a comprehensive guide. Our specialists are also able to help over the phone.
What costs do we as a business need to cover?
The beauty of this salary packing solutions is there are no extra costs to your business aside from a little time for your payroll staff to setup the payment system.
What are the set up and ongoing costs to the employer to put this employee benefit in place?
The real bonus of this salary packing benefit is that there are Nil costs to the employer.
Do you have unanswered questions? Let us know and we will be happy to answer them.
Novated Car Leasing Options does not purport to offer legal, financial or taxation advice. Employers and employees should seek independent advice as to the implications of a Novated Lease transaction. The salary packaging amounts and take-home pay calculations set out are estimates only. While due care is exercised by us to ensure integrity of the estimates it does not make any warranties, express or implied as to its accuracy or completeness. Powered by AllCredit.
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