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1300 547 226Lease or Buy?
Leasing versus Buying, How do I decide?
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Lease versus Buy – How do I decide?
The Decision on whether to lease or buy your new car should be a fairly straightforward one. At Auto Car Finance, we can help you thoroughly review the likely costs of both scenarios so that you can choose the option that best suits you. We’ll provide honest expert advice and support you with a hassle-free purchasing process if you decide to proceed.
Why would I choose a Novated lease?
If your employer gives you the option of receiving a car as part of your salary package, it’s worth investigating the many benefits a novated lease provides.
01
Easy Repayments
Your repayments will be made using a combination of your pre and post-tax salary, reducing your taxable income and saving you thousands at tax time.
02
Worry Free
A novated lease includes your vehicle’s running costs such as fuel, servicing, and tyres.
03
GST Incentives
You’ll enjoy GST excluded from both the purchase price and running costs of your car.
What is Salary
Packaging?
Salary packaging allows you to save on income tax and GST by paying for expenses with your pre-tax salary.
There are many items that the Australian Tax Office (ATO) allow employees to package, but your personal situation will be determined by your industry and your employer’s salary packaging policy.
At Auto Car Finance, we make salary packaging easy – saving you time and money. Our low management fees and exceptional customer service mean hassle-free motoring and more money in your pocket.
We recommend you speak with an independent financial adviser to determine which items you’re eligible to salary package.
Why Salary Package a
car with a novated lease?
Vehicles are the most commonly salary packaged item as they have the potential to deliver the most substantial tax savings. At Auto Car Finance, we can salary package new or used cars for you or your family member, including a vehicle that you already own.
- Reduce your PAYG income tax
- Save GST on your car’s purchase price
- Save GST on your car’s running costs
- Access fleet discounts at purchase and servicing
- Save on fuel with an Auto Car Finance fuel card
Topics
What is a sale and leaseback?
A sale and leaseback is an arrangement where the you buy an asset (vehicle) outright with your own funds, then receive the purchase price back into your account in return for leasing (or entering into a chattel mortgage) the asset from the purchaser.
How does it work?
The seller of the vehicle becomes the lessee and the purchaser becomes the lessor. You pay regular payments over an agreed contract term. You continue to use the asset which now becomes owned by the finance provider.
Who is sale and leaseback suited to?
A client who has the cash to buy a vehicle outright but also wants to receive liquid funds returned to their savings account or as a line of credit. You retain the right to use the vehicle as your own and get the cash you need to operate your business.
What are the eligibility criteria?
To be eligible for a sale and leaseback, you and your vehicle must meet the following criteria:
- You are a commercial loan or novated lease customer
- The vehicle was purchased with cash during the last 3 months
- Payment was made from your bank account, and the vehicle will be financed from the same account
- The vehicle is registered in your name
- The purchase was made via a dealer, and you hold a tax invoice for the sale
- The asset meets the standard criteria
What is a Residual Value [RV] or a Balloon Payment?
A residual value (RV) or a balloon payment is a lump payment due at the end of a loan, after paying smaller instalments for an agreed term. It allows you to make regular monthly repayments on your vehicle, with the remaining balance due in one sum at the completion of your loan contract.
How is it calculated?
A residual value/balloon payment is calculated as a dollar value or percentage of your vehicle’s purchase price. Example:
You buy a new car with a $30,000 loan over 4 years with a 20% balloon payment of $6,000 due in one lump sum at the end of the loan term.
What’s the benefit of a residual value (RV) or a balloon payment?
It makes your monthly instalments smaller and more affordable as well as:
- Improving your cash flow
- Allowing you to borrow more so you can buy a higher value vehicle
- Aligning the loan principal repayments with the vehicle’s value over time
What is a novated lease a residual value (RV) or a balloon payment?
When you finance a vehicle under a novated lease, the residual value is what that vehicle is worth at the end of the lease term. It’s a lump sum payment that’s due at the end of your finance lease, often referred to as a balloon payment.
Vehicles generally depreciate over time, with new cars losing value the fastest. Most new vehicles are worth 20-30% less than their sale price after the first year. Cars lose their value over time for a few different reasons.
General wear and tear will reduce the value of your vehicle, as will the manufacturer releasing a newer version of your car’s model.
What is included in my Novated Lease?
Your Novated Lease not only includes the finance for your new car, but it also includes:
- Your registration and on-road government insurance
- Maintenance and upkeep for carwashes and detailing
What is Novated Lease?
Watch our videos about novated leasing.
Buying a vehicle is a significant financial decision – it’s worth doing your research to ensure you make the right choice regarding vehicle finance. At Auto Car Finance, we’re here to help you make an informed decision on the best way to finance your car.
Discover How You Can Make Some Smart Savings
On your next purchase with our FREE guide: Novated leasing made simple
Simply by paying for things a little differently, you can stand to save thousands! The FREE Guide details everything you need to know about a Novated Lease to get started. It's the smarter way to finance your next purchase.
We don't give it out to strangers though - Fill in your details below and download the FREE guide to learn more.
Please contact us on 1300 547 226 for a No Obligation, FREE Quote, and Approval! Or, simply contact us today for a 5-minute callback.