Your Novated lease policy will set out the agreement for the terms of the lease, including all costs, insurance premiums, and other details that may affect your repayments and liabilities.
Salary sacrifice car costs when you acquire a vehicle through a novated leasing company include
The immediate benefit of making vehicle repayments this way is enabling employees to use a portion of their income tax to make finance repayments.
This is often much more beneficial than relying entirely on their post-tax income.
As with other types of lease, payments will be fixed for the agreed length of the novated lease term.
Novated lease insurance is generally available either through your lease provider or a private insurer. Confirm with your leasing company before you apply that they offer insurance if you do not have any.
Novated lease insurance with the leasing provider
If you arrange comprehensive insurance with your leasing provider, these costs will be included in your repayments and detailed in your novated lease policy.
Novated lease insurance with a private insurer
If you are using your own comprehensive insurance provider, you can usually make payments and claim reimbursement from the leasing company by sending your policy and proof of payment.
Comprehensive Insurance - Covers loss or damage to your vehicle or someone else’s caused by accident, theft, malicious damage or fire.
Redundancy Cover - Covers your lease payments and the running costs associated with paying out your lease, in the event you are made involuntarily redundant.
Write-Off Cover - Covers the difference between your comprehensive insurance payout and the amount to settle the debt in the event the car is declared a write-off.
Manufacturer Cover - Covers unforeseen defects, failures and faults due to a mechanical or electrical failure.
Residual Cover - Covers the difference between the Fair Sale Price of your vehicle and the ATO discounted value, up to the maximum cover of $20,000.
You can acquire a novated lease from specific novated lease companies. However, as an employee, your employer will first need to agree to let you get a car lease novated.
The easiest way to begin this process is to speak to the human resources team at your workplace and ask if they permit novated leasing. Alternatively, if you work for a smaller company, speak to your business owner.
As novated leasing benefits both an employee and employer, many workplaces allow salary packaging - if your workplace agrees to a novated lease, you can then ask if they have a preferred financier to supply the vehicle.
While it is possible to apply for a novated lease through some banks, doing so will only provide finance for the purchase price of the vehicle and will not include the running costs of the vehicle as part of the finance package. This is what would be called a non-maintained lease and are much less popular.