Our salary packaging customers may be eligible to access salary packaging through CBB and novated leasing through us.
There are a few misconceptions floating around about novated leasing, so we decided to take the opportunity to bust some of the most common myths!
#1 A novated lease will use up my salary packaging allowance
Nope. Using before and after tax deductions for your novated lease means you can package it in addition to your $15,899 salary packaging limit. You’ll still have your full salary packaging allowance to use on your everyday expenses and bills. Essentially, a novated lease increases your tax benefits.
#2 Novated leasing has a higher interest rate than other finance options
That’s an interesting statement (pun completely intended). The interest rate of a novated lease is technically higher than the interest rate of, say, a home loan. But the caveat here is the accumulative cost over the term of the lease/loan: a novated lease will usually be around 5 years, while a home loan is typically somewhere between 20 and 30 years. To make a long story short, you’re paying a little more interest over a much shorter period of time when you get a novated lease. Plus, we are connected with several financiers with varying rates, so you will be able to access a competitive interest rate.
#3 There’s no difference between a novated lease and a car loan
Again, nope! A car loan involves borrowing money to purchase a car, which you then pay back (including running expenses) with post tax dollars. Whereas a novated lease is a loan for a car that is packaged with all of your running expenses and repaid with a mix of pre and post-tax dollars to maximise your tax savings. Plus, we help you access fleet pricing on most makes and models, and you will save on GST on the purchase price. Better yet, you won’t pay any GST on maintenance and servicing through approved providers, which keeps the running costs down.
#4 I can’t get a novated lease because I’d rather choose my own car
Actually, a novated lease through CBB lets you choose almost any car you want – including make, model, and even colour!
#5 I can’t buy a second-hand car with a novated lease
Yes, you can – but there are some rules. You can source the second-hand vehicle yourself from a dealership or privately, with some conditions, one being that the car cannot be more than 10 years old at the lease end. For example, if you take out a 5 year lease, the car must not be more than 5 years old at the time of purchase.
#6 If I leave my job, my employer will take my car and I’ll be left without a vehicle
Not at all. The car is in your name and if you leave your employer, the novation simply stops, and you make the finance payments direct. You can then have the flexibility to transfer the lease over to a new employer or pay out the lease.