Discover the benefits of an EV novated lease. Compare leasing vs. buying to find the best option for you. Learn more now!
Electric Vehicle Novated Leasing: Benefits and Buying vs. Leasing
The automotive industry is undergoing a technological revolution, with a range of new vehicle types and energy sources to choose from. Electric vehicles (EVs) have emerged as the most popular and readily-available of these new forms of mobility, using batteries to power electric motors, either partially (known as a plug-in hybrid electric vehicle, or PHEV) in combination with a traditional internal combustion engine, or fully using electricity to charge its batteries.
Just as there are a bunch of options to choose from when it comes to EVs, there are a number of ways to get into an electric vehicle of your own. In this blog we’ll take a look at novated leasing for electric vehicles and talk about some of things you should know if you’re considering one.
What is an EV Novated Lease?
A novated lease, arranged through a salary packaging provider, allows employees to drive the car they want while maximizing their tax savings. The salary packager facilitates a seamless three-way agreement between the employee, their employer, and a financier like Metro Finance. With lease payments deducted from pre-tax income, employees can enjoy the benefits of a new or used vehicle while reducing taxable income—making salary packaging a smart and cost-effective way to drive.
How Does Novated Leasing for EVs Work?
Much like a novated lease for any other type of car, an EV novated lease will typically include all of the vehicle’s running costs in the monthly lease payments, including things like registration, insurance, maintenance, and even charging costs.
Benefits of Choosing a Novated Lease for an Electric Vehicle
Let’s take a look at some of the key benefits when it comes to leasing an EV:
01 /
Tax Savings
There are lots of benefits to novated leasing – including consistency of payments to improve cashflow – but the main benefits employees enjoy with novated leasing is the reduction to their pre-tax income via lease repayments, which could reduce their tax liabilities while also taking advantage of additional benefits when leasing an EV over a petrol or diesel-powered car.
In recent years, State and Federal governments have offered motorists a range of financial incentives to promote the uptake of electric vehicles, making them more affordable than ever to buy or lease. Metro has its own financial product, MetroEco, which offers a range of discounts and flexible terms for sustainable technologies, including EVs. Through a broker, you can explore how MetroEco can help you save on an EV with a loan or lease tailored to suit your needs.
02 /
Bundling EV Running Costs
A popular feature of novated leases is the bundling of a vehicle’s running costs into one regularly monthly pre-tax payment. All the associated costs of keeping an EV on the road are usually factored in: registration, insurance, servicing and maintenance, and even charging at public-facing charging stations.
03 /
Reduced Fringe Benefits Tax (FBT)
A recent initiative of the Federal Government is the waiving of fringe benefits tax (FBT) for zero or low-emission vehicles, including any associated running costs. This makes EVs a popular option for employers to offer their employees under salary packaging. Talk to your employer about what novated leasing options they have available, and how leasing an EV may benefit your circumstances.
04 /
Fixed, Predictable Payments
For many, the predictability of payments is a standout feature of novated leasing, which can help with household budgets and cashflow management. Depending on the type/s of salary packaging offered by your employer, you might also have the option to lease additional vehicles for your immediate family – which once again would contribute to one, monthly bundled pre-tax payment also covering all major vehicle expenses.
Novated Lease vs. Buying an Electric Vehicle
Ownership and Flexibility
Put simply, the biggest difference between EV ownership and novated leasing is all in the name: by purchasing a vehicle, either outright or via a loan, you own the vehicle and are responsible for covering all of its expenses; whereas with a novated lease you don’t own the vehicle at the end of the lease term, unless you choose to purchase it.
For many, leasing a vehicle – which is a depreciating asset – is preferable to owning a vehicle that requires constant upkeep and on-road costs. At the end of the lease term, you also have the option to choose a new vehicle and start another lease, meaning that you could be in a new car sooner and more regularly than owning one outright.
Tax Benefits and Salary Packaging
As we’ve talked about, one of the biggest benefits of novated leasing an EV is in the form of tax savings. Because lease payments are made by your employer from your pre-tax income, it can reduce your taxable income and net you additional tax savings, more than if you had purchased the vehicle.
Out-of-Pocket vs Pre-Tax Costs
Bundling an EV’s running costs into your pre-tax income also helps keep more money in your pocket while enabling predictable cashflow management; meaning you’re not up for more expenses that need to be paid from your income after-tax.
Is an Electric Vehicle Novated Lease Right for You?
Just as there are a multitude of car brands and vehicles to choose from, there are just as many financial options available when it comes to getting into the EV of your dreams. Novated leases are a popular option for many as they bundle the lease and running cost payments into one monthly pre-tax transaction, netting a range of benefits and providing greater transparency when it comes to managing a budget.
If you’re thinking of getting behind the wheel of an EV through a novated lease, talking to your employer is a great place to start. One of Metro’s friendly brokers will also be able to answer any questions you may have about Metro’s novated leases and other financial products, as well as filling you in on any current government incentives and savings to promote EV uptake.
Start a conversation with a Metro broker by clicking the link here.
