Last month, we busted five big myths about novated leasing with our Corporate Partner, StreetFleet, but there are still a few more that need to be addressed. So, buckle up and let’s get busting!
#1 A novated lease is more expensive than buying a car through different means
It may appear that way at first. This is because your payments are not only covering your car loan, but also your fuel, maintenance, registration, and roadside assistance membership. So yes, your routine payment amount is greater, but it’s covering more expenses.
However, this means you’re actually getting extra support to budget, because you won’t have to deal with unexpected car costs throughout the course of your lease. Plus, your repayments are made up of a mix of pre-tax and post-tax dollars, so you’re able to save on these expenses.
#2 I need accessories for my car, and a novated lease won’t cover that
Actually, it will. As long as you request the accessories at the start of your lease, you can package them. Roof racks, tow bars, floor mats, window tinting… just imagine the possibilities for making your new car your own (and how nice it will feel to save money on these extras)!
#3 You can only get a novated lease if you use the car for business purposes
Again, this was once the case, but not anymore. You can package any car of your choice, including the one you drive for work (even if you receive an allowance for it in your pay). It doesn’t matter if it’s your family car, weekend car, or even a car that’s fully decked out for 4WD adventures. You’re also able to package multiple leases, provided the finance doesn’t exceed your income.
#4 I’ll have to make a balloon payment at the end of the lease, and it’ll send me broke!
At the end of your lease, there is a residual – or a ‘balloon payment’ – but there are a few different ways to manage it, so you have the flexibility to choose the right option for your financial circumstance.
Before we discuss your options, it’s important to understand why there is a residual. The residual is set by the ATO, and it’s the reason why your repayments will be so affordable over the lease term. As we set up the lease, we can help you to choose a car that will hold its value, and we’ll let you know what the residual value is at the commencement of your lease (it’s a fixed cost). This way, there aren’t any surprises.
Now, let’s talk about your options. If you really love your car and want to keep it, one of these options is to pay the residual outright, but you can also extend your lease to pay off the residual over time. On the other hand, if you decide to sell the car, StreetFleet can leverage their networks to get you a great price. With this approach, most of the time you’ll make enough to cover the residual value, and sometimes more. To summarise, the residual doesn’t have to break the bank.
#5 I’ve heard that you aren’t allowed to buy a ute with a novated lease?
That’s not true! You can choose any car – and a ute with a carry load of less than one tonne is indeed classified as a car.
If you’d like to learn more about novated leasing, you can check out the StreetFleet FAQs webpage, or call the friendly StreetFleet team on 1300 273 359.