Novate Your Current Car
A ‘sale and leaseback’ allows you to move your car onto a novated lease and start saving thousands in tax every year.
I already have a car. Can I get a novated lease?
Absolutely, you can! It’s through a simple process called a ‘sale and leaseback’. A novated lease doesn’t have to be for the purchase of a new or used car. The team at Leaselab can help you work through your options for existing vehicles too. Let’s walk you through it.
What is a 'sale and leaseback'?
With a sale and leaseback, you sell your car to a lender and they loan it back to you. So, you still get to keep and use your car as normal - plus you get the value of your car in cash and you save on tax.How many wins is that?!
A sale and leaseback might suit you if:
- You’re an employee on a salary (PAYG)
- You need a quick influx of cash
- You want the tax savings and other benefits of a novated lease
- You own your vehicle (or you’re paying it off) and want to keep using it
From here, you pay back your vehicle over time - but this will operate just like a novated lease. We explain how this works just below.
If you want to get a novated lease, but you’re worried that you don’t qualify as you already have a car you’re happy with, a sale and leaseback could be what you need.
Why choose a sale and leaseback?
Keep loving your existing car. Free up some cash. Save on tax. It’s a no brainer with a novated lease.
A sale and leaseback is a great way to take advantage of all the tax benefits of a novated lease, while still using the car you have. Who wouldn’t want that? If you do novate your existing car via a sale and leaseback, you can still enjoy:
- Paying your lease via pre-tax income, thereby lowering your taxable income and paying less tax.
- Paying for all your running costs – fuel, servicing, car tyres, insurance, rego, roadside assistance – from your pre-tax income too.
- Not paying GST on parts and labour when you service your car.
- Plus having your vehicle and running costs managed in one easy deduction
Plus, if you ever decide you don’t want to keep your current car anymore, you’ll have plenty of options to continue benefiting from the tax savings of a novated lease. Once your lease ends and you’ve made all the required payments, it’s easy to upgrade your car on a new lease (more on this below).
How a sale and leaseback works
How it works is all in the name – and it’s that simple.
The lender pays you the value of your existing vehicle (or they payout your existing finance agreement).
We discuss the lease term you’d like to take (usually anywhere between 12 and 60 months).
We will confirm the residual value and ensure you are comfortable with it. The residual is the balance remaining at the end of your lease and is a mandatory requirement from the Australian Tax Office. It exists to close a loophole that might’ve otherwise allowed you to pay zero tax through this arrangement (which makes us sad).
Once some short(ish) paperwork is signed, we as your novated lease provider set up your sale and leaseback agreement and tell your employer how much to deduct from your salary each month.
Your vehicle is set up on a novated lease with a fixed monthly deduction from your pre-tax income. How good!
And that’s it. Your existing car is now saving you thousands.
At the end of your sale and leaseback term
At the end of your novated lease, when all payments are made, you have several options:
You can own your car again by paying the residual; or
You can trade in the vehicle or payout the residual and lease a brand new vehicle; or
You can sell the vehicle, payout the residual and keep any profit tax-free!
Sale and leaseback considerations
It’s GREAT that you love your current car. Now let’s get it saving you thousands on tax each year.
There are a few things to consider when bringing your existing car to a novated lease:
- Your car can’t be more than 12 years old at the end of the lease, so not all vehicles qualify.
- You need to be employed and paid via PAYG (most people are).
- Your employer needs to be set up for novated leasing. If they’re not, we can help – it’s super easy and doesn’t cost them anything. We are here to guide them through.
- You won’t save GST on the purchase of the car itself, but you will still save GST on all of your running costs (like fuel and servicing, for example).
You see, you get a lot of tax benefits when you novate your current car. You’re just missing out on a few perks that only come with buying a new car.
For instance, when you get a new or used car on a novated lease, you can access fleet pricing. And you don’t have to pay the GST on the vehicle, either! It’s a pretty sweet deal. So, it’s worth considering how much you want to use your existing car.
If you love your car but not enough to miss out on the chance to get a new car at a highly discounted price, it’s a good idea to weigh up whether a new car is a better option. After all, a new car will have a full warranty and stronger resale value, too.
A novated lease sounds pretty good, right?
Same car. So many benefits. It all stacks up to a pretty strong case for a novated lease, and Australians are very lucky to have this option. In our humble opinion, novated leasing is one the most cost-effective and financially rewarding ways for you to run your car. It is also one of the very few ways that an employee can create a significant tax break. With thousands of dollars in potential savings each year, it's a real game changer for working Aussies!
Get in touch
We’re experts in the novated leasing space, so if you have any questions or want to chat through the process feel free to give us a call on 1300 888 594. You can send us a message if that suits you better. Our true passion is creating the best possible novated lease packages, tailored to you to reduce tax and maximise savings – with a great car too!
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