When your parents wanted a new vehicle back in the day, it was pretty straightforward. They either went down to the dealership and bought one. Or they flicked through the back of the newspaper and went looking for ones that sounded good, because there were no photos… and if there were, they were tiny, blurry and grey.
Nowadays, we’re spoilt for choice and, even we’ll admit, it’s confusing as heck if you’re new to it all. There are a number of ways to get your hands on a sweet, new ride and today we’ll discuss two of the most common ones: novated leases and simply buying a car outright. What are the differences between the two and which one suits you best? Let’s find out.
What is a novated lease?A novated lease is when your employer agrees to lease a car on behalf of you, with the repayments coming out of your pocket. One of the best things about a novated lease is that the repayments come from your pre-tax salary, allowing you to reduce your payable tax at the end of the financial year.
Benefits of a novated leaseNovated leases come with a number of benefits:
- Reduction of payable tax
Your repayments and running expenses come from your pre-tax salary, meaning that your amount of payable tax is reduced. Let’s say you’ve got an annual income of $65,000, and your total novated lease repayments and vehicle running costs were $9000 for the year. This means your taxable income would be reduced to $56,000. Pretty sweet, right?
- Easy to update
It’s super easy to upgrade your car when you’ve got a novated lease. Let’s say, at the end of your lease, you want to upgrade to the latest model of your car – you simply sign a new lease and you’re good to go.
Buying outrightWe all know what buying a car outright involves: you either pay for a car in the full amount, or you get a car loan that helps you pay it off bit by bit. Many people find that buying a car outright suits them best – especially if they just want a car that they’ll keep for a long time.
Benefits of buying outrightBuying a car outright comes with its perks:
- Ownership of vehicle
You have full ownership of the vehicle when you buy a car outright, allowing you to set and forget if you’re not interested in upgrading anytime soon.
- Lower interest rates
You’ll often find that a car loan comes with lower interest rates than a novated lease, making it more cost-effective if you’re looking at long-term use and ownership of the vehicle.
Both options have their perks, so it’s all down to whatever suits you the best. If you’re looking for a great deal on a novated lease or buying a car outright, talk to the team at Carbroker.com.au. They use their database of over 2,000 car dealerships Australia-wide to find you the best car for the best deal, whether you want a novated lease or a car loan. Get chatting with the experts at Carbroker.com.au and get into your new ride sooner!