Which is the better option? Let’s compare
When you’re considering your next car purchase, once you decide which car you want to buy, one of the next biggest decisions is a Novated Lease versus buying your car outright, and which is the better option for your back pocket? Here, we compare the options and depending on your personal situation (spoiler alert), you’ll be surprised to find that paying cash isn’t always better choice. But first, let’s start with the basics
What is a Novated Lease?
A Novated Lease is a three-party arrangement between you, your employer, and a Novated Lease provider (like Fleet Network). Under that arrangement:
- Your employer deducts the lease payments (and often running costs such as fuel, servicing, insurance) from your pre-tax salary.
- Because payments are made from your pre-tax income, you reduce your taxable income and therefore pay less income tax.
- You typically also avoid paying GST on the purchase price of the car and on its running costs.
- At the end of the lease, you generally have several options: pay out the residual (balloon) amount and own the vehicle, sell it and keep any surplus, or take out a new lease
Buying your car outright with cash: How it works
Buying outright means you pay for the entire cost of the vehicle in full using your own money or savings. All ongoing costs (fuel, insurance, servicing, registration, repairs) are paid out of your post-tax income. There is no lender, no residual, and no involvement of your employer.
Novated Lease vs buying outright
Compare the difference for yourself and save thousands
If you’re thinking of paying for your new car outright, opting for a Novated Lease from Fleet Network could save you a lot. How much exactly? To find out, take our savings calculator for a spin below. Compare your current arrangement with a Novated Lease to see your savings. It only takes a few minutes and could save you thousands.
