Novated leasing an electric car provides multiple advantages, including potential savings on finance, registration and maintenance costs. Novated lease electric vehicle finance options also enable FBT/GST tax savings by taking payment out of pre-tax salary payments.
However, should your lifestyle shift and an EV no longer meet your needs, early termination charges could cost thousands. Here’s how you can avoid such fees.
- Personal Contract Purchase
Electric vehicles (EVs) are becoming increasingly popular, and novated leasing provides the ideal way to take advantage of their lower running costs and contribute towards creating a greener world while increasing take-home pay and decreasing carbon emissions.
With the Government EV discount, now is an opportune moment to explore purchasing or leasing an electric or plug-in hybrid electric vehicle (PHEV), with FBT exemption when first leased on or after 1 July 2022.
At the end of your contract, you have the novated lease electric vehicle finance options to buy the vehicle outright for an additional final large payment and own it outright. Unlike purchasing outright, novated leasing offers excellent savings opportunities on registration fees, comp insurance premiums, servicing, and roadside assistance costs. However, make sure the vehicle fits your needs by comparing prices and asking for a breakdown of pricing to ensure that no extra payments are incurred than necessary.
- Hire Purchase
With a hire purchase agreement, you’ll make an initial deposit payment and borrow the remainder over an agreed-upon time frame. When your contract ends, buy outright or hand back your vehicle as per its original condition.
Novated lease electric vehicle finance options allow you to combine car purchases and operating expenses into one regular payment using pre-tax salary. It can help save on Fringe Benefits Tax (FBT), GST savings on car expenses and import tariffs, and make battery electric vehicles an accessible option.
- Lease Purchase
If you don’t plan to return the EV at the end of its lease period, buying it for its contract-stated buyout price may be an ideal solution if you believe its future book value will be less than current used car prices, or believe advanced battery technology and increased investment will make EVs more cost-effective shortly.
Be wary, however, and thoroughly review and question every line item on the paperwork. Dealers may mark up original sale prices to compensate for tax credits for electric vehicles (EV), leading to overpayment when trading in or selling.
Novated leasing makes purchasing an electric vehicle within reach for many Australians by reducing taxable income and packaging all driving costs into one easy, monthly payment plan – including Fringe Benefits Tax exemption, GST savings on purchases and running costs, and possible eligibility for government incentives.
- Lease-to-Own
Leasing an electric vehicle can be an ideal choice for drivers looking to experience its thrill. But when selecting this option, keep these points in mind:
Leases bind lessees to their vehicles until the lease contract is fulfilled, and early cancellation of an agreement typically requires exorbitant fees that could equal all your monthly payments for the remaining term of your contract. In contrast, financing through loans allows you to sell or trade it back at any time – this difference sets leasing apart from financing via loans in terms of flexibility and costs associated with early termination fees.
Consider also taking advantage of federal tax credits available to EV owners that leasing companies may apply toward your monthly payments. Do the math and check with the dealership to be sure you qualify for this $7,500 incentive; state and local savings might also apply.
If you choose to lease an EV, you’ll pay lower monthly payments than with a regular car. Because EVs have fewer maintenance needs and are less likely to break down, your running costs will be significantly lower, too (NSW Gov, 2021).
All novated lease costs, including finance, insurance, registration, servicing, and tyres, are bundled into one simple payment and collected from your pre-tax salary, saving you money. It is especially beneficial for people on higher incomes who could save more by leasing an EV.