If you’re in the market for a new car, there’s no better time to take the plunge than at the end of the financial year, and with such a tough trading environment at the moment, dealers are more eager than ever to make a deal to move stock.
Traditionally, car loans are the first option for car buyers car, but there is another (possibly more financially beneficial) option: novated leasing.
According to Alliance Leasing CEO Will Hetherington, the terms of novated leases have changed quite dramatically in the lessee’s favour in recent years.
No more do you need to travel a certain amount of kilometres or pay a big chunk of tax if you get estimates wrong as the calculations are done very differently these days, making them more practical for car owners, WIll said.
Using novated leases gives car buyers the buying power of the novated leasing company (including access to cheaper tyres, fuel, insurance and servicing), as well as the tax reduction from salary sacrifice arrangements.
It also removes the surprise costs associated with being a car owner.
Under a novated lease, all your insurance, fuel, servicing and repayments are taken from your income before tax is taken out – reducing the amount you pay tax on. That means your costs are reduced before you take home your pay, leaving you with a much cheaper arrangement for owning a car.
Will Hetherington says car dealerships are offering some incredible deals on new cars as we approach the end of the financial year, and the COVID-19 restrictions have resulted in quite a big drop in sales.
“All people have to do is get in touch with us and we’ll do the negotiating for you, with the dealerships and the insurance companies. You’ll be able to get some great offers from car companies, and access the buying power of a fleet of cars,” said Will.
“We’ve got a great calculator on our website which helps you work out what it will cost to lease a car, and if you think that will work for your circumstances, come and see us or call us,” he said.
If you’re wondering about the technicalities of a novated lease, it’s a three-way agreement between you, your employer and the leasing company which can be negotiated by Alliance Leasing. You ‘salary sacrifice’ to pay for the car (including the extras like fuel, insurance, rego and servicing) and pay less tax in the process.
Alliance Leasing can make all the arrangements on your behalf, including negotiating with dealers, submitting your finance application in accordance with the financier’s credit policy, managing your agreed budget for registration, insurance, fuel, tyres and servicing, and all is deducted from your salary.
Once the finance is approved, Alliance Leasing will get in touch with your employer through your payroll area, the employer signs off that they are happy to undertake the lease (paying the lease before calculating your tax and paying you).
At the end of the lease agreement, you can buy the car outright if you want, renew the lease, or sell it and upgrade to a different car, or even the same model but a more recent year.
Alliance Leasing will work with you and your unique circumstances to develop a suitable package and incorporate the reputable financiers to ensure adherence to responsible lending. As always, it is important to get specific advice from your financial advisor before entering any financial agreement.
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