Novated leasing has quickly taken off in Australia as the primary way people are obtaining new cars. When things work well, novated lease companies can be a great way to give people who would not otherwise have access to new cars a way to obtain the necessary financing to drive their desired vehicles.
However, there are naturally a number of questions related to this form of leasing arrangement, as it does have a number of significant differences from traditional methods of auto financing. Here is a look at five of the top myths related to novated leasing companies in order to provide some clear information and truthful facts.
Myth 1: I probably make too much Money for it to be Worth using a Novated Lease.
Fortunately, while this myth may be very common, that doesn’t make it true. A number of Australians have a lot to gain simply by using a novated lease to obtain a new car. There are a number of people who mistakenly have the impression that the cutoff is at $70,000, and that they automatically become ineligible above this income mark.
However, if you have an FBT, or fringe benefit tax rate, that exceeds your personal marginal tax rate, you stand to make a great deal in tax savings when you try out a novated lease.
Myth 2: I can’t figure out on My Own how much I would need to Pay back with a Novated Lease.
This myth, like the first, is commonly held but not true. If you work with a decent novated lease company, and there are many of them, they’ll do most of the work for you.
The truth is that novated lease companies will usually have online calculators on their web pages so you can figure out on your own just how much money you might end up saving when you run the numbers over the lease’s course. Each car repayment is made on a monthly basis under a single charge that includes the running costs of the vehicle at the same time.
Myth 3: I would need to Cover Thousands of Kilometres to see any benefits from a Novated Lease.
Many drivers believe that novated leases are not worth having, due to their mistaken belief of how many kilometres they’d need to cover for the leases to be fiscally worth it. However, the FBT rules have changed specifically to deal with vehicle leases. What this means for you is that even if you don’t drive 10,000 km each year, you can still take advantage of a number of savings with a novated lease.
Myth 4: Because of My Age, it’s risky to take on a Novated Lease and I’d rather not get Locked into One.
The truth is that younger drivers are actually looking into these forms of salary packaging arrangements for cars. When you sign up for a novated lease, you can choose whatever kind of new car you are interested in.
Being able to freely choose means that you can find the kind of car that works well with your personal lifestyle as well as with your personal budget. You don’t need to worry that you might only have a few boring or bland budget cars to choose from; you can move all the way up the line into luxury vehicles if you’d like.
Myth 5: I’ll have to use the Car for Business Purposes only if I take on a Novated Lease.
Finally, another huge myth related to novated leases is that people can only use the cars from such leases for business purposes. However, once again, it just isn’t true. Novated leases are created specifically to help people who don’t embark on business trips with their cars frequently or at all.
This means you don’t need to think about a log book or keeping up with what you are doing through receipts or similar kinds of records in order to stay on the good side of the tax man.
Finally, there are a number of benefits present when you use a novated lease, including the ability to pick up a fuel card that will be valid with more than 90% of petrol suppliers in Australia.