Top Novated Lease Misconceptions
Author: Fleetcare
Every office, sports club or collection of people has one. The nonsense talker, the distributor of misinformation or the plain old waffler. Whatever you call this person you should know how dangerous they are. They weigh in on each and every conversation with their own brand of misinformed wisdom. Maybe they don't want anyone else to know, maybe they hate others having the right information or maybe they're just plain ill informed. Whatever the reason we have itemised some of the biggest Novated Lease myths below in an attempt to bust these derailing forces.
You have to buy a new car
This really isn't true. In many cases second hand vehicles are acceptable. As long as they are not more than 8 years of age at the end of the lease they are perfectly acceptable as a Novated Lease vehicle. Obviously there are some exceptions to this rule and on some rare occasions vehicles younger than this can be prohibited from use on a Novated Lease. Equally there are vehicles which can be accepted even in cases where it will be older than 8 years of age at the end of the lease period. With this in mind it's always wise to ask your Novated Lease provider over the phone.
You need to drive lots of kilometres per year
This misconception relates mainly to the Fringe Benefit Tax (FBT) rate. In the past drivers paid a lower rate of FBT if they clocked a specific number of kilometres per year. This is now being phased out and for many new lease holders the new rate of 20% will apply irrespective of the number of kilometres they travel.
You're too young.
This is one of the more curious myths in the sense that we have no idea where it came from. Anyone of any age (you just need some form of drivers licence) can apply for a Novated Lease. As long as you are employed and can afford the repayments the door is open. In addition to this Novated Leases can also be transferred to new employers so there really is no difficulty in this area.
You don't earn enough.
A Novated Lease is a tax saving service which consolidates vehicle expenses and reduces taxable income so obviously some will save more than others. While this is true it is uncommon for a Novated Lease to generate no benefit for even the lower paid worker. In short even lower paid staff can still benefit from the discounts and savings on offer.
After thoughts
Researching and cross referencing your financial decisions will help you distinguish fact from fiction in the world of vehicle finance. Remember to trust the evidence and where you're curious ask an expert. Novated leases have been around for a good number of years in Australia, but it's just a matter of understanding them to see how they can really be a great alternative to traditional car finance. Like everything else in life you should try and avoid the "That will never work" brigade as they could derail all your plans with one simple piece of misinformation.
If you're interested in learning more about how a novated lease works, Fleetcare can help. They are Australia's biggest fully independent novated leasing and fleet management company with offices all over Australia.
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