Novated Leasing

Buying a car? Novated leasing might save you even more long-term.

What is novated leasing?

Novated leasing is a three-way agreement between your employer, a financier, and you as an employee to purchase a car through a lease agreement. It is arranged as part of a salary package. The employee sacrifices part of their pre-taxable income to go toward the cost of the lease. The car’s GST purchase price and depreciation are claimed by the employer which reduces the amount an employee must sacrifice. Running costs are also claimed which reduces the amount of fringe benefits tax.

Novated leasing tax advantages

Novated leasing is an ATO-approved way of reducing tax for both employers and employees. An employee can reduce their pre-tax income with a novated lease which reduced their overall tax payable. The car becomes a fringe benefit but is paid for by the employee using their pre-tax dollars or salary. The employee can also claim running costs such as fuel, insurance, and servicing as part of the agreement, most of these costs will be used with pre-tax dollars further reducing costs further.

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Novated leasing with Savvy made easy

Trust the experts in novated leasing, making the entire process simple and cost-effective for everyone

Competitive rates
With over 25 lenders on our panel, we find the most competitive lease rates from Australia’s top financiers.
Effective Cashflow Solutions
You may choose to have a balloon payment at the end of the agreement to reduce your monthly repayments.
Fixed and Low Rates
The interest rate is fixed for the term with no hidden rates and Savvy will deliver the market leading rates.
Fleet car buying options
Want to save even more? Ask about Savvy’s fleet buying option for even more discounts.
More choice
Choose your own make and model as part of your novated lease so you’re never compromising on choice.
Save on tax
Using pre-tax income on your car could mean paying less in tax and saving more through novated leasing.

How to arrange a novated lease?

Figure out if you are eligible to take out a novated lease based on these steps

Ask your employer

Not all employers offer novated leasing as part of their salary packaging policy. Any full-time employee can be party to a novated lease agreement if their employer also agrees to be a party to the agreement.

Check with your employer or finance company if you can gain access to fleet discounts – this could boost the value of your lease as you get “more car” for your money.

Buy a car within your budget

Though a novated lease sacrifices some of your salary to pay for a new car, you will still need to look for a car that’s suitable for your budget. You will need to figure out the maximum monthly cost you can afford (as you will not be receiving that as part of your pay) which will determine what type of car you can purchase under the lease agreement. Ideally, your monthly cost, as paid for by your pre-tax salary, will reduce your income tax obligations when your salary is subject to tax.

Check your credit history and apply

It is difficult for people with bad or patchy credit histories and/or low credit scores to gain approval for novated leases. Make sure your credit history is clean and does not have any mistakes, or your application may be rejected.

You will need to consent to a formal credit inquiry as part of the novated lease process. You will be notified if you are approved for credit by the financier or broker.

Sign your lease agreement

You will be given an agreement between you, your employer, and the finance company that details your obligations, the amount being sacrificed, and the residual value payment and which party guarantees the amount. Signing the lease agreement formalises the novated lease.

Remember to Keep a logbook

Depending on how your novated lease is structured, you will need to keep a logbook showing all the kilometres travelled for business purposes. If you pay for fuel and on-road costs yourself, these may be reimbursed by your employer. You can keep a physical logbook, use an app, or even tracking software through your car’s computer connection port.

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