Novated leases are becoming more popular because of their flexibility and the benefits they offer. For the beginner, a novated lease is a three-way agreement between the lessee, his/her employer and a company that offers a car lease. Like any other agreement, it is surrounded by several misconceptions. Here are some of them.
You need to buy a new car
This is not true on most occasions, as numerous cases have proven that used cars are still acceptable—provided that they’re no more than 8 years old at the end of a lease. Of course, there are still special exceptions bound to circumstances specific only to selected parties.
It’s only for the well-off
Most people believe this, yet it is wrong. One doesn’t need to have five-digit salaries a year just to benefit from a novated lease; in fact, everybody can partake in the endeavour as long as one’s individual tax rate is below the Fringe Benefit Tax (FBT) rate.
You’ve got to have miles
Or kilometres, specifically. While drivers in the past paid lower FBT rates after driving a specific number of kilometres annually, today, this old method is almost obsolete—many new lease holders now enjoy a new 20% rate regardless of how many kilometres they’ve travelled.
It’s not for young people
Not really true, as all one needs is a valid driver’s licence and a full-time income. That being said, too many young people still have an aversion to novated leases, fearing they’ll end up penniless.