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Eziway Car Club

Novated leases—the benefit that keeps on giving


On April 09,2020  Share
Is a new car on your horizon? We take a deeper look into why a Novated Lease is a great choice for your money.

 

Is a new car on your horizon in 2020? Among the slew of workplace benefits available, one raises it head above the parapet more than any other; novated leasing. The thought of driving a new car is enticing. No GST payable on vehicles purchased through a dealership; significant fleet discounts provided by the novated lease administrator, and; the ability to package ex-factory vehicle modifications (think sun rooves, mag wheels and extended warranties); means you can live the dream of driving a new car specked up to your desire.

But here’s the thing; beyond the shiny trinkets and baubles that are upfront discounts and tailoring, the real savings of a novated lease are achieved over the term of the lease. The impact on your back pocket of paying running costs in pre-tax dollars is often surprising and must be the focal point of any budget forecast.

Standard running costs are:

  • Fuel often paid for by a fuel card
  • Tyres usually one set every 2 years
  • Service & Maintenance logbook and unscheduled
  • Registration
  • Insurance
  • Engine oil and Batteries
  • Car washes and Detailing services

Administrators estimate running costs (all of the above) as an annual figure and divide it by 26 to arrive at a fortnightly pre-tax amount to be deducted from your pay. In this way, the cost of keeping your car running is ‘smoothed’ over a year. Virtual buckets (accounts) are created for each cost and money apportioned into each bucket every pay cycle. If managed well, you will always have enough money in each bucket to pay for your actual costs.

Cost estimates are guided by industry resources like Glass’s Guide for specific vehicle makes and models. Administrators will want to know how many kilometres you expect to drive a year to estimate fuel consumption, maintenance needs and tyre usage. Annual fuel consumption is converted to a dollar value based on a conservative price per litre, and frequency and cost of service and maintenance are determined by the manufacturer’s logbook recommendation and your predicted mileage.

Figures tell the story

For a standard mid-sized sedan (Mazda 3), driving 20,000km a year, with the owner on a salary of $60,000 and opting for a lease term of five years, the following tax savings are indicative for running costs:

  • Per pay cycle — $69.46 (fortnightly)
  • Per year — $1,805
  • Over life of lease — $9,029

See the savings for yourself

Seeing is believing. Using Eziway Leasing’s Car Leasing Calculator will help you get you started on the road to a novated lease. Our Quick Car Quote tool has been designed to give you a quote estimate based on only minimal information, and when you’re ready to get a tailored quote, our Novated Lease Consultants will be available to help you simplify the process so you can enjoy your new car, and the savings!

 

AUTHORS

Michael O'Donnell | National Bid & Marketing Manager

03 8768 5777

michaelo@eziway.net.au

 

Curtis Hosking | Group Marketing Manager

03 8768 5777

curtis@eziway.net.au