Novated Leasing - Electric Cars

Novated leasing for EVs combines the tax savings of salary packaging with the naturally lower running costs of electric vehicles. Your car payments, insurance, and even charging costs can all be bundled into a single pre-tax deduction from your salary, reducing your taxable income and saving you money.

Additionally, EVs often benefit from lower registration costs and government incentives, further driving down expenses. With a novated lease, you can enjoy these savings while spreading the costs of your EV over manageable repayments, helping you drive the car you want without compromising your budget.

Running costs for electric vehicles (EVs) are significantly lower than traditional petrol or diesel cars, thanks to reduced maintenance needs and cheaper charging options. Here’s how we calculate the key expenses:

EVs don’t require petrol, but charging still needs to be factored in. Our Novated Lease calculator includes a yearly allocation of $750 for charging your EV. This amount is flexible—you can adjust it at any time during your lease to reflect your actual charging habits, whether at home, at work, or using public charging stations.

Tyres are another key running cost. We calculate your annual tyre budget based on the vehicle type, average tyre cost, and your expected mileage. For example:

• Total kilometres driven during the lease term (e.g., 15,000 kms annually x 5 years = 75,000 kms).
• Divide total kilometres by 35,000 kms (the typical tyre lifespan) to estimate the number of sets needed.
• Multiply this by the cost of a set of tyres and spread it over the lease term.

EVs have fewer moving parts, meaning they need less servicing than traditional vehicles. In our calculator, we allocate $350 annually for maintenance, covering routine check-ups to keep your EV running smoothly.

Registration and insurance costs are calculated based on the type of vehicle you choose. EVs often benefit from reduced registration fees and incentives in some states. For added convenience, your first year of comprehensive insurance can be included in your lease and renewed using funds from your Novated Lease account.

These calculations ensure your EV’s running costs are accurately estimated, giving you a clear picture of the savings and convenience that come with driving electric.

A novated lease is the perfect way to make driving an EV more affordable and convenient. Here are some of the benefits of a novated lease for an electric vehicle:

• Tax Savings: Reduce your taxable income by bundling car payments and running costs into pre-tax deductions.
• Lower Running Costs: EVs are cheaper to maintain and charge than petrol cars, and a novated lease helps you manage these costs effortlessly.
• Incentives and Discounts: Benefit from government rebates and lower registration costs available for EVs in many states.
• Convenience: Bundle all your expenses—like payments, insurance, and charging—into one simple, pre-tax payment.

With Credit One, you’ll get the expert guidance and support you need to drive the EV you want while maximising your savings and simplifying your finances.

Charge Allocation (Formerly Fuel Expenses):

In our Novated Lease calculator, we have accounted for a yearly allocation of $750 for charging your vehicle. This allocation can be adjusted before starting the lease or at any point during the lease term based on your usage.

Tyres:

Estimating a tyre budget in a Novated Lease calculator is a bit more intricate due to the varying costs of different types of tyres. For instance, lower profile tyres might be pricier but important to drivers. In our Novated Lease calculator, we determine an average cost for each vehicle category we consider. We then apply this cost to a typical timeframe for changing tyres, and this sets the budget.

(Average cost of a tyre X 4) = Total cost of a set of tyres

Your annual kilometres driven X the lease term in years = Total kilometers

Total kilometers / 35,000 kms (average tyre change period) = Sets of tyres needed

Sets of tyres needed X Cost of the set / lease years = Total annual tyre budget

For example

If Mike drives 15,000 kms per year and is beginning a 5-year lease, with the cost of his tyre set being $850:

15,000 X 5 = 75,000 kms / 35,000 = 2.14 sets of tyres X $850 per set = $1,819 / 5 years = $363.80 per year

Maintenance:

While most cars require servicing every 10,000 to 15,000 kms, the service cost depends on your chosen vehicle. However, Electric Vehicles (EVs) generally need less servicing, so we allocate $350 per year.

Registration and Insurance:

Estimates for registration and insurance renewals are based on the type of vehicle you select.

Finance:

Our finance structure follows a standard novated lease calculation with slight variations. The lease starts two months in arrears, meaning the first two months have $0.00 payments, which are distributed across the remaining lease term. For instance, in a 5-year (60-month) lease, there would be 60 payments, but the 1st and 2nd months are $0.00, followed by 58 payments of $400, for example. This arrangement lets the Salary Packaging company arrange services and deductions before the initial payment is due.

The initial year's Comprehensive Car Insurance can be financed if needed, saving you from an upfront insurance cost. When insurance is due for renewal in 12 months, sending in the renewal notice allows the Salary Packaging provider to cover this using funds from your Novated Lease account.

Residual Value:

The residual value, also known as the balloon payment, is the amount due at lease end. The Australian Taxation Office (ATO) permits car payments through your employer. This setup saves on taxes and is convenient, but for tax reasons, the equity in the vehicle cannot be retained. Hence, the vehicle needs to be paid back based on a realistic market value at lease end.

The good news is, having a residual value makes lease repayments lower during the term, enabling most people to opt for a more expensive car using the lower payment structure.

The residual value is a percentage set by the ATO, influenced by the lease term, with a buffer of around 5% on either side of the required rates.

Loan or Lease:

For many, financing is essential when purchasing a car.

Finance Approval Conditions:

After using our Novated Lease Calculator and ensuring the deduction is manageable for your salary, the next step is getting finance or lease approval. Generally, obtaining approval for a Novated Lease is slightly easier than traditional finance. This is because the financier receives repayments directly from your employer before taxation, enhancing their confidence in loan repayment.

For a pre-approval, click here. This approval provides an initial endorsement for your chosen vehicle. It's non-binding, and there's no pressure to use it. The approval strengthens your negotiation position when purchasing. Those prepared to buy with funds in place can request a cash price for immediate delivery.