Salary Packaging.... where to start

Looking for answers? Do you know what questions ask for the right answers !

Salary packaging is well known by the employees of the government, charity and health sector organisations, as it improves the employees overall financial position. Novated leasing fits neatly within salary packaging, allowing for anyone who is an employee to establish substantial savings in the costs of owning and running a vehicle. Considering that there is a small number of the Australian workforce who use salary packaging, it's not surprising even less people know what questions to ask to ensure they are getting the best deal for their Novated lease.

Typically, to find out if salary packaging of a Novated lease will benefit you, you need to know your annual salary excluding super, how far you drive per year and an idea of what car (or price range) you're looking for. From here, not all Novated lease quotes are the same.

So... before you go to the bottom of the Novated lease quote to see the saving, make sure your quote shows, Total amount financed (incl GST), Residual (incl GST), Monthly repayments (incl GST) and how many payments due over the finance term. Not shown or not clear... ask the quote provider for your quote to have them shown. It is your right as the person applying for the finance to be provided with the finance information clearly.

As the majority expense in the quote will be the finance and the payments don't change for the life of the loan, it's important to establish overall finance cost by; The number of lease payments x monthly repayments + residual = Total finance cost.

The rest of the expenses for running a novated lease, are split into two general categories;

Static Expenses
Costs may change annually but are not dependent on the vehicle travel.
ie Registration, CTP, Comprehensive insurance, Management fees and Roadside assistance.

Variable Expenses
Costs that are influenced by how far the vehicle travels.
ie Fuel, Tyres and Maintenance costs.

Over the life of the novated lease, if the actual running expenses are lower than provided for, a refund of the excess monies is refunded to you via your payroll. If your happen to over spend then the monies are deducted from you via payroll.

So when you are reviewing your next novated lease quote, check the finance costs and have a close look at the amounts that have been allowed for the running expenses, don't forget to leave a bit extra in the running expenses, to allow for prices increases on the variable expenses over the next couple of years.

If all the numbers and calculations start to become a blur, why not take a moment to have a chat with one of our Novated Packaging Specialists on 1300 71 38 12.