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Salary Sacrifice Car Loan

Salary Sacrifice Explained

Salary sacrificing is the practice of taking part of an employee’s remuneration as concessionally taxed benefits instead of fully assessable salary. By opting for salary sacrifice, individuals can choose to receive a portion of their income in the form of non-cash benefits, such as a company car, additional vacation days, or contributions to a retirement savings plan.

The Power of Salary Sacrifice Car Loan

Are you looking to save money on your car expenses and reduce your taxable income at the same time? A salary sacrifice car loan might be the perfect solution for you. By opting for a salary sacrifice arrangement, you can pay for your vehicle and its running costs through your employer using pre-tax salary, resulting in potential savings and financial benefits.

What is a Salary Sacrifice Car Benefit?

A salary sacrifice car loan, also known as salary packaging or salary sacrificing, lets you use part of your pre-tax salary to cover personal expenses like a car and its costs. Unlike traditional methods, it involves a novated lease arrangement between you, your employer, and a lease company.

In contrast, traditional car financing methods, like standard car loans or buying with cash, don’t offer the tax advantages or financial flexibility of a salary sacrifice car loan. While they provide ownership upfront, they often involve higher repayments and don’t reduce taxable income like a novated lease can.

In this arrangement, you have the freedom to choose a new or used car for unlimited personal use, with the added benefit of a GST discount on the vehicle purchase price. Your employer deducts the lease payments and ongoing car expenses from your pre-tax salary, reducing your taxable income and potentially saving you thousands of dollars in income tax.

Benefits of a Salary Sacrifice Car Loan

Opting for a salary sacrifice car loan comes with a range of benefits that can help you save money and make your car ownership experience more convenient. Here are some of the key advantages:

By paying for your car and related expenses with pre-tax income, you can reduce your taxable income and potentially pay less income tax.

Both the vehicle purchase price and running costs are eligible for GST discounts, allowing you to save even more on your car expenses.

With a salary sacrifice car loan, all your car costs are bundled into a single payment deducted from your salary. This eliminates the need for separate budgeting and helps you streamline your expenses.

As part of a novated lease arrangement, you gain access to fleet discount pricing on the vehicle cost and ongoing expenses, saving you money on your car purchase.

Many salary sacrifice car loan providers offer 24/7 driver support, ensuring that you have assistance whenever you need it.

With your vehicle running costs included in the lease payment, you don’t have to worry about unexpected out-of-pocket expenses for services, repairs, or even car washes.

How Does Salary Sacrifice Car Loan Work?

Acquiring a salary sacrifice car loan involves a simple step-by-step process. Here’s how it typically works:

To begin, check with your employer to ensure they offer a salary sacrifice car benefit. Next, make sure you meet the eligibility criteria set by both your employer and the novated lease provider. This may include factors such as employment status, salary level, and the type of vehicle you intend to lease.

Once eligibility is confirmed, you can proceed to choose the car you want to lease. Whether it’s a new or used vehicle, take advantage of the fleet discounts available through the novated lease arrangement. Consider factors like fuel efficiency, maintenance costs, and your personal preferences when selecting the vehicle.

After selecting your desired vehicle, submit your lease application to the novated lease provider. Ensure you provide all the necessary documentation and information required for the application process.

Following the submission of your lease application, your employer will review and approve the application. They will confirm their willingness to deduct the lease payments from your pre-tax salary and manage the ongoing car expenses, such as fuel, maintenance, and insurance.

Upon approval from your employer, the novated lease provider finalises the lease agreement. Once all formalities are completed, you can start enjoying your new vehicle under the novated lease arrangement. 

How It Benefits Our Clients

To illustrate the potential savings and benefits of a salary sacrifice car loan, let’s take a look at some examples:

These examples demonstrate how salary sacrifice car loans can result in significant cost savings and financial benefits for individuals across different industries and income levels.

How do I calculate the potential savings of a salary sacrifice car loan?

To estimate your potential savings, consider factors such as your annual salary, the car’s purchase price, running costs, and the applicable tax rates. It’s best to consult with a financial advisor or use online calculators provided by novated lease providers.

Ready to take advantage of the benefits of a salary sacrifice car loan?

Get a free quote or speak with a representative to learn more about how you can maximise your savings and streamline your car expenses with a novated lease. Contact us today!

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Frequently Asked Questions

Salary sacrifice car loans are offered by employers who provide this benefit to their employees. Check with your employer to see if this option is available to you.

Yes, you have the freedom to select a new or used car of your choice. However, there may be certain restrictions or criteria set by your employer and the novated lease provider.

At the end of the lease term, you have several options. You can make the residual payment to own the car outright, extend the lease for a new term, or upgrade to a new vehicle and start a new lease.

To estimate your potential savings, consider factors such as your annual salary, the car’s purchase price, running costs, and the applicable tax rates. It’s best to consult with a financial advisor or use online calculators provided by novated lease providers.