Remunerator News

Jan 28 2021

Your Financing Options: Cash and Dealer Finance vs Novated Leasing

A Novated Lease

A novated lease is an ATO approved method involving a three-way agreement between you, your employer and novated lease provider. One of the main benefits is the financial savings you make. A novated lease allows you to pay for your new car and running costs with pre-tax income.

Pros:

  • Your taxable income is reduced meaning you pay less income tax
  • Remunerator’s buying power allows you to save on the purchase price of your car
  • You get access to discounts from a wide network of tyre and servicing suppliers
  • You don’t pay GST on all your car’s running costs
  • Novated leasing helps you budget – all your car related expenses, running costs and finance payments are bundled into one affordable payment
  • Flexibility in choice of car – you can lease any car, new or used
  • No upfront deposit for car required

Cons:

  • If you haven’t included Remunerator’s GAP cover insurance in your novated lease, you may need to cover any shortfall between the residual value and the sale price of the car

Dealer Finance

Dealer financing is a type of car loan offered by dealerships where they secure the loan funds on your behalf. Dealer finance is usually limited to new cars available within specific dealerships.

Pros:

  • Convenient to complete the purchase within the dealership
  • The financing can be negotiated with the dealer

Cons:

  • New vehicles only
  • It could cost you more as you run the risk that the dealer has marked up your payments to increase their profit
  • Running costs of the car are paid from post-tax income
  • Car model options limited to what is available at the dealership
    • Remunerator have exclusive access to stock from dealers and manufacturers Australia-wide

Cash

The most straight forward of the options, paying cash involves you paying upfront the cost of your new vehicle.

Pros:

  • No interest costs
  • You own vehicle outright
  • No fees

Cons:

  • Limited choice in car purchase options, based on savings
  • Large initial outlay of cash
  • Running costs of the car are paid from post-tax income
  • Car is a depreciating asset
  • No savings made

The Best Option:

The best option for you depends on your specific circumstances.

If you want to save the most on your next car, a novated lease could be the best option while also offering a range of other benefits.

To see if a novated lease is an option for you, talk to our novated leasing specialists today on 1800 501 703 or email novated@remunerator.com.au