Novated Lease vs Buying Outright: Is a Novated Lease Really Better?
What’s the most cost-effective method to purchase a car? It’s a question that continues to enrage debate and rightly so.
A novated lease vs buying outright: which is better? Contention still exists because of course large scale financial decisions such as buying a car should be made with all the facts and only after careful consideration.
Both methods have obvious positives, and as the potential car owner, it’s up to you to figure out which will work better for you. It’ll always be more relevant to your circumstance.
So, at Vehicle Solutions, we have worked to place all the pertinent information regarding whether a novated lease or buying outright will suit you the best. Continue reading to find out if a novated lease is the vehicle financing option that you’ve been searching for!
What Is a Novated Lease and What Are the Benefits?
Undeniably the most significant advantage of a novated lease and where you’ll save the most money is the post-tax salary benefits. A novated lease is an agreement between three parties, you, your employer and a fleet provider.
The idea is that your employer sacrifices a percentage of your salary each week and pays it directly to the fleet provider. By doing it this way your taxable income is reduced and you won’t finance the GST either, which will save a considerable amount of money when compared to buying outright.
Your novated lease includes all of your on-road costs including fuel as well as servicing and maintenance. At the end of the novated leasing period, you will have the option to pay a lump sum to legally purchase the vehicle, which you can then keep or sell tax-free if you wish.
Buying a Car Outright with a Consumer Loan
It’s the most common method of procuring a new vehicle, and often that’s just because of the lack of understanding of how novated leasing works and how it can save you money. Taking out a loan and buying outright allows you to pay off the car in its entirety over the total period of the loan.
While some drivers find this preferable, throughout the loan and the vehicle’s life your repayments will be higher, and you won’t see any of the benefits of salary sacrifice. You also won’t save on the GST for any necessary purchases for your car.
Additionally, cars do depreciate very quickly, and trading in your car after you’re looking to upgrade can regularly feel underwhelming. Continuing to obtain vehicles through novated leasing will never leave you with the hassle of selling or trading in a car again.
Call the friendly team at Vehicle Solutions today and find out how much you can save with a novated lease!