My salary sacrifice company does novated leases for cars but I don’t understand how it work. Is it like a rent to own thing? Is there a benefit to doing one?
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I am actually looking at one right now
You lease a car for the period you choose and each pay period, your employer sends the leaser the payment before you are taxed on it. As opposed to getting paid and taxed, then paying off the debt. This reduces your tax bill at the end of the financial year
The lease also includes a fuel allowance, maintenance, repairs, registration, insurance etc
When the lease expires you can pay a remaining balance to buy the car, renew the lease, upgrade to another car or just stop and return the car
I am looking at a 60k car, so repayments are $240 a week (takes into account the tax reduction) for 3 years. I will have an outstanding amount of about 30k after 3 years.
If I financed elsewhere for 3 years for the same amount (30k), the repayments are about the same but I will have all the extra out of pocket charges like maintenance, repairs, insurance etc
Is it worth it? I’m still deciding but ultimately it depends on your income, what type of car, how much you drive etc. EV cars are also FBT (fringe benefit tax) exempt so it’s even cheaper
I’m also negotiating as their insurance is $180 a month (included in the payment) but elsewhere its $80-100 for the same, so the amount will be less
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