Car Leasing in Australia
Car leasing in Australia is a genuine option that can be considered by individuals, whether they are seeking to purchase their own car or just to rent over an extended period of time. However, while businesses lease their car fleets the world over, individuals tend to purchase rather than lease. But why is this? Why should an option that companies feel to their advantage not also be worthy of consideration by individuals? Why should you not get involved in car leasing as opposed to purchasing or standard finance?
Buying a car is a not inconsiderable financial decision, and when you consider that there are many ways to finance your car you should also consider whether or not you have explored each of the alternatives with an open mind. In many cases a leasing arrangement can offer advantages over regular car loans, and you have several options available to you look upon leasing as an alternative means of owning your own car. Take a novated car lease, for example.
Novated Car Leasing
A novated car lease involves you making repayments for your new car, only the payments are made from your gross income before tax. In other words, you pay no tax on your car lease payments. This type of novated car lease is essentially an agreement between you, your employer and your car finance company, and can be covered by used or new car finance. You have to be in employment for this, and also have the agreement of your employer.
Although your employer is involved in the agreement, the responsibility for the car leasing repayment lies with you as the buyer, even if you decide to quit your job. In such an eventuality you can't just leave the car on your employer's doorstep because the repayment agreement is between you and the lender; your employer is not responsible for any repayments.
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Novated Car Leasing Agreement
Such agreements are welcomed by most lenders because they have the security of payments being maintained from your pre-tax salary while you are still in employment. Any problems will normally arise should you decide to leave your employer and move on. In such cases, as has been already stated, it is still your responsibility to maintain your payments, and you will then either have to make the repayments personally, or come to another novated leasing agreement with your new employer.
Many employers will actively offer employees novated car leasing arrangements as an incentive to remain committed to the company, and many government bodies also offer such deals for employees. The advantages of this type of car leasing in Australia include a wide range of cars from which to choose, and you also have the opportunity to purchase a car that would normally be way beyond your price range. You can also maintain the payments yourself if you leave the company.
Operating Car Lease
Many businesses and individuals use vehicle leasing to fund the purchase of their cars, and there are other leasing arrangements other than novated (which are also referred to by some as 'salary packaging'). There are operating leasing and finance leasing arrangements that you can consider. Operating car lease is a leasing agreement under which you return the vehicle when the agreed lease period has expired, with no further costs to you, while finance leasing ends with you paying a lump sum and assuming ownership of the vehicle.
Tax claims are claimed as the lease payment though do talk to your accountant or tax specialist to ensure your are able to claim your deduction. Each of these forms of leasing can have a different tax arrangement.
Fully Maintained Car Lease
Then there is a 'fully maintained' leasing agreement, in which the lease payment includes the running costs of the car. It is possible to include tyres, and even the fuel, in this type of agreement. Many companies prefer this form of leasing because they have no further costs involved in running the car.
So, as you can see, car leasing is Australia is not straightforward and offers you many options. The decision whether to buy or to lease is not a straightforward one, and many Australians need professional advice prior to coming to a decision.
