Seven reasons why you should choose a novated lease

There are many ways to buy your next car.

You can splash your own cash, take out a personal loan, draw on a mortgage or source finance from a lender.

And then there is the option of a novated lease, which removes many of the day-to-day hassles of car ownership and adds some enticing financial benefits that could save you money.

Sounds good, right? Well, let’s explore the seven reasons why you may wish to consider a novated lease when choosing your next new car.

A novated lease basically allows you to choose your own ‘company car’ in agreement with your employer.

You’re not limited to any particular type of car, the make, model and how much it costs, whether it is a brand new or used vehicle – unless there are any boundaries or guidelines stipulated by your employer. You can even take out a novated lease on your existing car.

Essentially, there are two types of novated leases - a self-managed lease or a fully-maintained lease. The former allows you to take control of the day-to-day management, from sourcing the vehicle to negotiating the sale price, arranging finance and paying for running costs such as insurance, registration, fuel and maintenance.

With a fully-maintained lease from a leading provider such as Maxxia, its team takes care of all the hard work – sourcing, buying and financing the vehicle – and then bundles the running costs together.

In both cases, a novated lease allows your employer to make regular payments to service the lease with a portion of your agreed salary before it is taxed. This, in turn, can reduce your overall annual taxable income, which could result in more disposable income.

However, the recipient of a novated lease is subject to Fringe Benefits Tax (FBT), which is an additional tax applied to any benefits you receive from your employer outside of your normal cash salary or wages.

To offset any FBT you may be liable to pay on a novated lease, payroll deductions can be established to include a portion of your post-tax salary in what is known as an Employee Contribution Method (ECM). This effectively reduces the taxable value of the vehicle, which subsequently eliminates the payable FBT.

One of the biggest benefits of a fully-maintained novated lease is that it vanquishes the surprise of the ancillary expenses associated with running a car by spreading them across the year and rolling the costs all into the regular payment plan.

This means there are no additional bills for your selected running expenses, including the likes of insurance, servicing, registration, fuel, tyres and even car washes. It’s all taken care of.

When establishing a fully-maintained lease, your nominated annual running costs are totalled and then a payment plan is determined by Maxxia’s team according to the distance you intend you cover each year. The agreed amount is then deducted from your regular pay over the course of the lease period, and can be paid weekly, fortnightly or monthly depending on your pay-cycle.

Maxxia makes it even easier to budget by allowing users to adjust their payments at any time, if, for example, you are putting more or less kilometres on the car than originally estimated.

If you need help searching for a new car, a fully-maintained novated lease from Maxxia can also remove the hassle – and haggling – which could not only save you from a few grey hairs but also plenty of time.

All you have to do is choose the type, make, model and colour of the car you want to drive and the team at Maxxia will take care of the rest, from sourcing the vehicle from its nationwide network of dealerships, to completing the paperwork required to register and insure the car, to arranging the finance.

Maxxia will then arrange delivery of the vehicle and, after that, also manage the regular maintenance schedule and all other standard annual costs such as insurance and registration.

All you have to do is enjoy the ownership experience.

Finding the right car at the right price, right now is a tough task at the moment as new cars are in short supply following disruptions to global vehicle production owing to the COVID-19 pandemic.

But, by choosing a fully-maintained novated lease, the team at Maxxia could knock down some of those hurdles and get you into a new car sooner, and potentially cheaper.

Thanks to Maxxia’s significant buying power through its nationwide network of leading car dealerships, you can access a much broader selection of vehicles than you may be able to find locally when trying to buy privately.

This not only allows Maxxia to search for the best deals around the country that could reduce your lease payments and save you money, but also potentially skip ahead through any waiting lists to receive your new car sooner.

We’ve already discussed how a fully-maintained novated lease could potentially increase your disposable income by your employer paying for the lease from your pre-tax salary, but there are also additional tax savings that could apply such as reduced Goods and Services Tax (GST).

When purchasing a new vehicle through a novated lease, it removes the GST component of the sale price, up to the $5885.54 threshold.

But the benefits don’t stop there, as you could be eligible to claim back from your employer the GST on all running costs such as fuel, insurance, maintenance, tyres and even car washes. Plus, there is no threshold for GST claimable on these expenses.

Basically, all you need to do is either submit the tax invoice from the supplier to Maxxia to pay on your behalf or reimburse you if you have already paid for the expense.

Each tax invoice will provide a breakdown of the GST component that has been applied to the transaction, which Maxxia submits to your employer, which then requests a refund from the Australian Tax Office (ATO) that could be passed back to you as Input Tax Credits (ITCs).

Talk to your employer to understand how they use your ITCs.

A fully-maintained novated lease removes all the hassles – and any surprises – when it comes to maintaining your vehicle properly.

As this cost is already bundled into the payment plan, payment for your regular servicing needs is totally fuss free.

We also make the process easier for you.

Simply make a booking and drop your vehicle into the dealership or service provider, let them know it is managed by Maxxia and ask them to contact the Maxxia Maintenance Centre team before commencing any work.

Maxxia’s dedicated team of experienced mechanics and technicians will then consult with the service provider on the work required, negotiate the cost on your behalf and ensure the job is completed to meet manufacturer standards and roadworthy requirements.

Critically, Maxxia has established labour rates for all service providers and discounted rates for all tyre outlets, ensuring its customers are not deceived by any unnecessary ‘upselling’ techniques.

The Maxxia team communicate directly with the leaseholder to advise of all the work that has been carried out and, upon completion, will pay the invoice directly from your novated lease account.

It’s that simple.

A fully-maintained novated lease from Maxxia removes many of the hassles of car ownership and with the confidence required of a trusted partnership.

Maxxia is an authorised and industry leading provider with established and competitive product offerings and a dedicated expert team based in Australia.

Novated Leasing is approved by the Australian Taxation Office. To learn more about novated leasing and whether it is the right option for you, contact Maxxia today.