Specialist Services for Affordable Used Car Novated Lease

Taking on novated lease for a second-hand rather than a new vehicle may present benefits, especially for the employee. The costs of used cars can be lower than new, allowing the employee to acquire a vehicle with less salary sacrificed. With the lower cost, the option may be accessible to more employees. From another perspective, it may provide the opportunity to purchase an upgraded used model where the new version is considered too expensive.

The employer receives the benefits of tax deductible lease payments and vehicle running costs. By reducing their salary by the sacrificed amount, employees may move to a lower tax bracket, saving them on tax payable. By not taking on the finance themselves, employees may have greater potential to take on finance for other purposes.

Novated Lease may be seen as a special privilege used by employers as an effective measure to offer to employees as an incentive, bonus or in lieu of a pay rise.

Leasing attracts highly competitive interest rates with commercial rates typically lower than personal car loans. Novated Leasing allows employees to purchase a motor vehicle at lower business interest rates. Saving on total interest payable on their purchase.

• To find out what competitive rates we can source for your Novated Lease, give us a call.
• Tax-deductible expenses and payments for employers.
• Less tax paid by employees.
• Competitive rates, cost-effective interest rates.

There are a number of considerations when deciding whether to take on a Novated Lease on a new or a second-hand vehicle. New car leasing rates may be lower than for used vehicle rates. Repayment comparisons can be made using our Finance Calculator.

The price of a second-hand vehicle would be lower than for the same model new. The leasing payments would be less, and the employee required to sacrifice less towards the monthly payments. But the maintenance on a second-hand vehicle may be higher over the lease term than for a new car. This may increase the overall cost and the amount of the salary sacrifice.

Used vehicle loans can differ from loans for new vehicles and those differences may need to be considered. The cost of insurance and registration on used vehicles can differ from new.

The vehicle resale value at the end of the term may be better for a vehicle purchased new rather than for one purchased second-hand. The resale or value at the end of the term should be considered when deciding on the residual.

For a more in-depth new v used comparison on a particular make or model, contact us for a quote on Novated Leasing for both options.

• New Car Novated Lease rates lower than for used vehicles.
• Used car prices lower than new, provides lower repayments.
• Consider value at the end of the term.

Before proceeding with a Novated Lease, both employee and employer should be aware of all the financial implications of the arrangement.

For employees, novated leasing involves sacrificing a portion of their salary to cover all expenses relating to the purchase and upkeep of the vehicle. This includes not only the lease payments but the ongoing costs of maintaining, registering and insuring the vehicle. All these costs should be itemised or estimated to ensure the employee has a full understanding of the financial implications on their salary.

Employees should consider how reducing their salary by the required amount may impact their ability to cover their other living expenses and achieve their financial objectives. Not having to take out motor vehicle finance in their own name, may allow an employee greater capacity to take on finance for other purposes.

The salary sacrificed may present savings to the employee through lower tax payable on their reduced salary. Savings may also be realised through acquiring a vehicle at commercial interest rates rather than at personal finance interest rates.

Employers can realise the tax deductions available on lease payments and may utilise a Novated Lease as an opportunity to reward an employee in lieu of a salary increase. But taking on asset acquisition finance may impact their ability to take on finance for other purposes.

Company vehicles used by employees can be subject to Fringe Benefits Tax. This can be an additional expense which may be added to the employee’s salary sacrifice.

Get in touch so we can explore the best options for you.