By Abbey Jane
Have you been spending Saturday mornings sipping lukewarm lattes and traipsing Geelong’s numerous car dealerships looking for new wheels? Before you lay down a deposit and commit to a car loan with a hefty interest rate, meet the people that will literally save you thousands through a novated lease.
The Salary Packaging People are Geelong’s premier salary packaging and novated leasing outfit, helping everyday people make the most of their hard-earned dollars. Their main mission is to help you pay less to the taxman. Talk about a noble cause.
While salary packaging is an employment benefit offered to workers in industries such as health, education and not-for-profit, novated leasing is available to anyone in private industry as long as your employer comes to the tax-saving party. But you need to use the car for work right?
“Wrong. That’s a common myth,” says Dan Nicholls, Head of Customer Experience at The Salary Packaging People. “You can get a novated lease on new and used vehicles up to 12 years old. We’ve done utes, 7-seaters and vans. We’ve just started on Teslas.”
So why is a novated lease better than a car loan?
“Novated leases save you money,” reassures Dan. “A novated lease on a car is a financial agreement where you repay the car out of your pre and post-tax pay. You also don’t pay GST upfront on the purchase. That’s an initial saving of thousands. On a fully maintained lease, 100% of the running costs are covered. This includes rego, insurance and servicing. Given a car is a depreciating asset, you are actually mitigating the cost of the depreciation with the tax savings.”
If you’re someone who ignores the service spanner when it lights up on the dash, or dread that registration payment at the start of every year, novated leasing is the answer to your car problems. Under the lease agreement, The Salary Packaging People will construct a budget that covers the running costs of your vehicle. We’re talking fuel, servicing, tyres, insurance, registration, and even car washing and valeting.
Remember, never putting off servicing also means keeping your vehicle safer for you and your family.
So why isn’t everybody doing it?
“There’s a stigma around car leases that they are only for corporate types or that you have to use the car for business purposes. The fact is any employee can save a small fortune driving the car they really want,” Dan explains.
“A lot of people are attracted by 0% finance offers on car loans, only to end up paying more for the car in other ways. Something else to keep in mind is that if you have an existing car loan, we can potentially switch you over to a novated lease. We always do what is in the best interest of our customer for the most possible savings.”
While some people worry they won’t own the car through a novated lease, The Salary Packaging People confirm this isn’t the case. The car is yours under the lease agreement and when you reach the end of your lease term, there are a number of options for dealing with the residual value. You can even sell your car privately. As a final benefit, any profit you make on the sale price compared to your final residual payment is yours to keep, tax-free.
What if my employer doesn’t do it?
In the nicest possible way, explain to your employer that they would be silly not to. It is a zero cost to businesses with any admin fees paid for by the employee. The Salary Packaging People will support your payroll team to set up the payments. So, it’s no extra work and if enough employees do it, employers can even reduce their payroll tax.
“It’s a powerful tool you can use to reward, recruit and retain,” Dan regularly reminds businesses. “Any progressive company should have a strong employee benefit program that offers their employees the opportunity to work for a caring and decent employer. It’s proof that you value your staff. You don’t want your employees to think you won’t help them, especially when this could potentially be the only way they could afford the car they wanted.”
If you’re looking for new wheels and want to save on a novated lease, talk to Dan Nicholls and the team at The Salary Packaging People on 03 5229 4200.