Myths VS Facts
On the surface, a Novated Lease can seem like a perk that is just too good to be true, which is why there seems to be a lot of questions and especially a lot of myths surrounding Novated Leasing. We here at ProNovate have traveled down the rabbit hole, forum after forum, reading people’s bad experiences at the hands of companies that don’t care. Some have been misinformed or aren’t aware of changes that have occurred in the industry. There are a lot of myths that surround this fantastic benefit which is available to everyone.
The internet is a wonderful place for people to get together and discuss items with like minded people and to also learn a thing or two. Internet forums are always a hive of activity, especially when you look at some of the big names like Whirlpool, Reddit, CarAdvice, OzBargain. We thought this would be a great medium to see what people really think about Novated Leasing and find out first hand some of the myths and misinformation that people have. So here we go, take a look below at four of the most common results we found, and our responses with the facts.
Myth 1: Must Be A New Car
This is one of our favourites. It is a common misconception that you can only get a brand new car on a Novated Lease. And whilst it is true that we get massive discounts on new vehicles, so much so that our new car prices can be lower than a demo model, you don’t have to get a brand new car on a Novated Lease. You can have a used vehicle up to the age of 10 years old on a Novated Lease, you can even buy from a private seller or refinance your current car. We do recommend dealer sales though because you don’t finance the GST component, it means you can spend 10% more at a Dealer and it costs you the same as a Private Sale worth 10% less. You’ll also get Guaranteed Title together with at least a Statutory Warranty when buying from a Licensed Dealer.
Myth 2: Must Use For Business
Another great advantage is that even if you have 0% business use, then a Novated Lease can still save you thousands of dollars every year. In fact, you don’t even have to be the one driving the car, you can get a car for anyone in the family. In 2010, the ATO changed the rules so that even if you are driving 5,000 km’s per annum, you will get the same tax treatment as someone who drives 20,000 km’s per annum. We also use the Employee Contribution Method (ECM) which means you don’t actually pay any FBT.
Myth 3: Paying Cash for a Car is the Cheapest Option
The old saying “don’t borrow money on a depreciating asset” simply falls apart once you consider the tax benefits of a Novated Lease. The key is the tax deduction you get, not just on the finance but also on as many of your car’s running costs as possible. In some cases, the overall impact is the equivalent to a negative interest rate, so it’s like you’re being paid interest on your loan, not the other way around! Instead, your new motto should be “pay off non-deductible debt first”. Most people who think they’ve paid cash upfront for a car or paid their car loan off early will still have a mortgage outstanding on their home … which doesn’t give them any tax deductions and charges up to 30 years’ of interest. I know it’s a real head-scratcher but our Consultants are here to answer your queries and run through some examples.
Myth 4: You Don’t Own The Car
Just because a Novated Lease is offered through your employer, it doesn’t mean that the car isn’t yours. The car is registered in your name and if you change employers, you get to take the car with you! It is even possible to own the car outright at the end of the lease. We have access to a number of disposal methods to maximise the resale value of your car. If you sell it for greater than the balloon payment (aka residual value), that profit is yours to keep, tax-free.
So there it is, the most common myths about Novated Leasing, busted. Despite the internet being a great place to do your own research, make sure you base your decisions on proven facts from industry trusted sources. If you have any more myths that you would like answered, just get in touch and we will happily go through them with you
June has been a big month for savings on new cars. Take a look at the ProNovate Deals page to see just how much we have saved our clients. Before you head on down to your local dealership, give ProNovate a call and let us prove to you how easy and exciting the buying process can be. To find out more information, please call 1300 000 PRO (776) or email email@example.com
Real Client Feedback
” Reece Hoffman was very good and responsive. Very positive to talk to. Delivered as promised.”
Luke- Southport, QLD
“Your consultant Alan Tan needs a special mention. Fantastic to deal with and appreciated his patience with our questions, knowledge and service he provided by always willing to go extra step to make our experience smooth.”
Swapna- Pemulwuy, NSW
Terms and Conditions*
These figures used are correct at the time of sourcing. The numbers are subject to change. Figures are based on a novated lease estimate for an individual earning $100k p.a., driving 15,000km/yr, over a 3 yr term, living in NSW. Individual circumstances may vary. Savings are based on the Recommended Retail Price, driveaway (including stamp duty and registration costs). The images used for the vehicles shown are strictly for illustration purposes. These deals are subject to approved purchases only. All Utility vehicles have been calculated at 100% business use. Why? Utility vehicles are classified as commercial vehicles, we have an article explaining more, but also feel free to get in touch so we can answer any questions.