Car Lease Sydney
Looking for a car lease, Sydney-based and want the best deal available? Compare more options and save on tax with Savvy today!
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Car leases are popular in Sydney with business owners, self-employed workers and employees. They allow the lessee to take control of the leased car for a set period (paying to do so along the way) without ever owning it in their name. This can save a significant amount of money over the course of the agreement and ensure that businesses can stay up to date with their car models more easily.
That’s why Savvy has partnered with a wide panel of financiers to help you get fully approved online for car leasing wherever you are, whether you live in the Harbour City, Newcastle, Wollongong or smaller locales like Broken Hill, Ballina or Ulladulla. With easier maintenance and tax benefits at your disposal, you can get your online car lease application started here today.
What are the different types of car leases available in Sydney?
The car leasing agreements available to business owners and sole traders in Sydney are as follows:
Finance leases
Finance leases function essentially how you’d expect a lease to function: the lessee agrees to lease a car purchased by their financier by agreeing on a set monthly payment and timeframe for the agreement, which can range from 12 months to five years.
Once this period is completed, the lessee is obligated to settle the residual amount in one of the following ways:
- Paying it and taking ownership of the car
- Refinance it to continue leasing the car
- Sell or trade in the car to cover it and start a new lease
- Sell or trade in the car to cover it and end your lease
Payments on these leases are based on the price of the car before GST is added, reducing their cost. You’ll have to organise and pay for all of the on-road costs yourself, as finance leases are also known as non-maintained leases.
Operating leases
Operating leases function in much the same way as finance leases, with a couple of key differences: firstly, there’s no concrete residual payment at the end of the agreement, meaning the lessee is able to simply hand the car back at the conclusion of the term.
Secondly, the payments on these leases incorporate various on-road costs, meaning you don’t have to worry about sourcing all of them yourself (known as fully maintained leasing). These costs can include:
- Car registration
- Comprehensive car insurance
- CTP insurance
- Fuel
- Maintenance
- New tyres
Businesses may favour these leases to save on paperwork, which in turn saves time. All of your repayments are able to be claimed, which can save you thousands. However, payments are higher than those of finance leases.
Novated leases
Novated leases are different to the previous two types of lease, as these are able to be taken on by employees rather than business owners. In this agreement, the lessee’s employers agree to take on the lease’s payments, deducting the required amount from the lessee’s pre-tax income (known as salary packaging or sacrificing).
What makes this option so appealing is that it reduces your taxable income, thus saving a meaningful amount on income tax each year while still paying the same amount for the use of your car. Additionally, the car can be 100% for private use, rather than solely available for work purposes.
Lessees are given the choice of paying the residual at the end of the lease and taking ownership of the car, refinancing the residual to extend their lease or trade in or sell the car and lease another model.
What are the tax benefits of taking out a car lease in Sydney?
There are several key tax benefits that apply to finance and operating leasing arrangements. These include:
- Tax-deductible payments: you can claim your leasing payments as a business expense up to the percentage you use the vehicle for commercial purposes. This means that if your car is used solely for your business, you can claim each full payment as a tax deduction.
- GST-free purchase: leasing companies are able to claim the GST on the purchase of the car, which can then be passed onto you.
It’s important to be aware of ATO guidelines for tracking the usage of your vehicle in order to claim expenses accurately.
For novated leasing, the salary sacrifice arrangement reduces your income tax as mentioned, but car running costs can also be used to do this in addition to the lease payments themselves (for fully maintained leases). These can all also be GST-free.
However, it’s important to be aware of the Fringe Benefits Tax which applies to novated leasing. This could cost thousands of dollars overall; however, by making contributions post-tax, which is known as the Employee Contribution Method (ECM), you can reduce your FBT liability down to as little as $0.
Why Sydneysiders choose Savvy for their car leasing needs
A trusted brand
With more than a decade in the industry under our belt, we’re one of the longest-serving and most respected car finance brokers in Australia.
No paperwork needed
Because all car lease applications are conducted 100% online, you can submit all of your documents via secure web portals from wherever you are.
Fast online approvals
With our smart technology and experienced finance consultants, we can help you turn around your application in just 48 hours from start to finish.
What our customers say about their finance experience
Savvy is rated 4.9 for customer satisfaction by 3952 customers.
How to compare the best car lease offers with Savvy
Type of lease
As mentioned above, there are several different types of leases available for you to choose from which will suit different borrowers in different ways. For example, if you’re an employee and you’re looking to take out a car lease, you’ll only really have a novated option to choose from. Business owners may choose between finance and operating leases based on what they intend to do with the car at the end of the agreement.
Interest rate
Interest rates are one of the easiest aspects of a car lease to compare. Each financier will list their rates when displaying their finance offer, with higher rates resulting in greater costs. In terms of reducing your interest rate, there are several avenues you can take. Improving on your credit rating is one way to do this, such as paying off existing loans and lowering credit limits.
Fees
In addition to interest, you’ll have to consider the cost of fees on your lease. Fortunately, you usually won’t encounter monthly service fees on a lease, as it essentially serves as a rental. However, you may have to pay up to $350 to $400 on an establishment fee, which is then built into your payments. There may also be fees associated with repaying your lease early, which will depend on how long is left and how much is left to pay.
Monthly repayments
Because you’re not paying for the purchase price of your car in instalments, your repayment structure isn’t as simple as evenly dividing the cost of the car across however many months your lease runs for and adding interest and fees. It's important to be able to compare the monthly cost between potential leasing deals, as not every financier will charge you the same amount to use the car.
Residual amount
You can also compare between offers based on their residual payments. The Australian Taxation Office (ATO) sets the required minimum residual value depending on the length of your lease, which is as follows:
- 1-year lease: 65.63% of original value
- 2-year lease: 56.25%
- 3-year lease: 46.88%
- 4-year lease: 37.5%
- 5-year lease: 28.13%
However, these are only the minimum required values. Financiers can choose to set residuals 5% to 10% above this figure on your leasing agreement, which is why it’s always crucial to keep this in mind.
Frequently asked questions about car leasing in Sydney
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