Q: Can you get a novated lease for a second hand car?
A: Yes, you can get a novated lease on a second-hand car. Usually, lease agreements are used to purchase and finance new cars, but there is no reason why you can’t get a second-hand car under a novated lease agreement. OK, it’s probably not the best idea to get an old banger under a novated lease agreement you probably don’t even need a loan for an old banger. in some cases, you can get the car you’ve already bought and are in the process of paying off switched to a novated lease through a sale and lease back agreement, where you get the equity you hold in the car back in the form of cold, hard cash and the car itself becomes part of a salary package.
Q: Can you get any sort of car under a novated lease agreement? Are there any limits?
A: This really depends on your boss and the company finance whizzes, as different workplaces have different rules.Ultimately, there isn’t really any limit on the type of car you can get, but realistically, you are probably best not to get some super flash sports number like a Lamborghini brand new. The repayments on that are going to be a bit on the high side for the average Aussie office worker, even as part of a salary packaging deal. However, in most cases, it does have to be a car rather than a truck or a motorbike. You will need a personal loan if you want to own and drive one of these (or, in some cases, the business might get out a business loan for a company-owned truck or motorbike, depending on the business in question).
Q: My boss has offered me a package that includes a car with a novated lease agreement. Does this mean that the car in question can only be used for business purposes?
A: No. You can use the car for whatever you like going on holiday, taking the kids to school, going shopping, visiting grandma on the other side of town, you name it. That’s one of the good things about novated leases. In fact, novated leases work better if the car under the lease agreement is mostly used for personal purposes. You may or may not have to keep a logbook of kilometres driven if you use the car for a mix of business and personal, depending on which Fringe Benefit Tax method your workplace uses, so ask them about this.
Q: Aren’t novated leases only suitable for people at the top of the corporate ladder with great big salaries who want to drive the latest luxury models of car?
A: No. Novated leases can work for everyone and for every sort of car. Anyone can benefit from a novated lease agreement as part of their salary package, though the amount saved in tax will depend on the value of the car, the number of kilometres you drive and your gross salary.
Q: Will a novated lease be suitable for everyone?
A: Novated leases work for most people. However, for people who have to drive a lot for business purposes (and driving to and from work is not considered business purposes) might be better off with a vehicle owned entirely by the company rather than a vehicle financed under a novated lease agreement.