The Impact of New Car Technology on Novated Leasing
New car technology is revolutionising the automotive industry, providing drivers with cutting-edge features that enhance safety, efficiency, and comfort. For those opting for a novated lease, these advancements can significantly increase the value of the car you drive while simplifying your payment structure.
Let’s explore how the latest vehicle technology influences novated leasing, from electric vehicles (EVs) to enhanced safety features and fuel efficiency.
The Role of New Car Technology in Novated Leasing
As car technology continues to evolve, novated leasing has adapted to provide additional savings and convenience for drivers. Novated leases already offer a fixed weekly payment bundling essential costs like fuel, insurance, and maintenance. However, with new car technology, you can enjoy even more advantages, making your lease more cost-effective.
Key Areas of Impact:
Fuel Efficiency: Advances in fuel technology and electric vehicles (EVs) mean that drivers can now choose cars that offer much better fuel efficiency, lowering long-term running costs.
Safety Features: Modern safety technologies such as autonomous emergency braking (AEB), adaptive cruise control, and lane-keeping assist make driving safer, reducing the likelihood of accidents and, in turn, insurance costs.
Electric Vehicles (EVs): Electric vehicles like the Tesla Model 3 and MG4 Excite Electric have the added advantage of Fringe Benefits Tax (FBT) exemptions, making them even more affordable under novated leasing.
With these technological advancements, novated leasing becomes an even more attractive option for those looking to enjoy the latest automotive technology while saving on running costs.
Technological Advancements in Electric Vehicles (EVs) and Their Effect on Novated Leasing
Electric vehicles are at the forefront of automotive innovation, and novated leases on EVs offer some unique advantages. One of the most significant benefits is the FBT exemption on electric vehicles, provided they fall within the luxury car tax (LCT) threshold. As of July 1, the LCT threshold has increased to $80,567 for FY2024-25, up from $76,950, which means that a broader range of electric vehicles can be leased without incurring FBT.
Why Electric Vehicles Are Great for Novated Leasing:
FBT Exemption: Many electric vehicles, such as the Tesla Model 3 and MG4 Excite Electric, qualify for FBT exemptions, saving you even more on your novated lease.
Lower Running Costs: EVs typically have lower running costs, charging significantly cheaper than fuel. In many cases, the cost of charging an electric vehicle is also bundled into your novated lease payments.
Eco-friendly Option: While we won’t discuss the environmental benefits in this blog, it’s worth noting that EVs are a sustainable alternative that allows you to contribute to a cleaner environment while enjoying the savings offered by novated leasing.
At Novated Finance Australia, we’ve seen firsthand how the popularity of electric vehicles has grown, and we’re proud to offer novated leasing options for these forward-thinking vehicles.
Eligibility and Limitations
When considering novated leasing for electric vehicles (EVs) or plug-in hybrid electric vehicles (PHEVs), it's essential to understand the eligibility criteria and applicable limitations. One of the key benefits is the FBT exemption, for the 2023/24 financial year, the thresholds will be $89,332 for fuel-efficient vehicles and $76,950 for other vehicles. This exemption can significantly reduce the cost of leasing for both employees and employers.
However, not all electric vehicles qualify, and only those that meet specific specification grade requirements and price limits are eligible for the tax exemption. Additionally, on-road costs such as registration, insurance, and maintenance are usually included in the novated lease, but these are considered non-deductible expenses. When calculating the affordability of leasing, it's essential to consider how it impacts your disposable income, as monthly lease payments will be deducted from your pre-tax income.
Understanding these eligibility factors and limitations helps ensure that the novated lease remains a cost-effective option for employees and employers looking to invest in sustainable, fuel-efficient vehicles.
Future of Electric Vehicles
The future of electric vehicles (EVs) is poised for tremendous growth, with advancing battery production, improved charging infrastructure, and increasing government incentives driving the shift towards sustainable transportation. The electric vehicle revolution is already reshaping the automotive landscape, with electric vehicle sales continuing to rise globally.
As more people adopt EVs, novated leasing options are evolving to reflect these changes. Flexible lease packages are becoming more popular, allowing employees to drive the latest EV models while benefiting from tax advantages through salary sacrifice. As self-driving vehicles and more efficient battery technologies enter the market, the upfront costs of EVs are expected to decrease, making them even more accessible. Additionally, with zero tailpipe emissions, EVs contribute to a greener future, which is a key factor in their growing appeal.
For those considering an EV on a novated lease, using a novated lease calculator can help determine the financial savings and help navigate the available leasing options. The future is bright for electric vehicles, and their continued technological advancements will only make novated leasing an increasingly attractive option.
Advanced Safety Features and How They Impact Your Novated Lease
The latest car models have various safety features that can significantly reduce the likelihood of accidents and improve the overall driving experience. These features also play an essential role in making novated leasing more beneficial.
Key Safety Features in Modern Cars:
Autonomous Emergency Braking (AEB): This system detects obstacles in front of your vehicle and applies the brakes automatically to prevent a collision.
Lane-Departure Warning (LDW): Alerts the driver when the vehicle unintentionally drifts out of its lane, reducing the risk of accidents.
Adaptive Cruise Control: Adjusts the car’s speed to maintain a safe distance from the vehicle ahead, making highway driving more comfortable and safer.
These features improve driver safety and reduce insurance premiums, making novated leases even more cost-effective.
Fuel Efficiency Advancements: Saving More on Your Novated Lease
Fuel efficiency is a critical factor when choosing a vehicle for a novated lease, especially with rising fuel prices. New car technologies, such as hybrid and electric powertrains, make cars more fuel-efficient.
Hybrid vehicles like the Toyota Camry Hybrid and Honda Accord Hybrid offer excellent fuel economy while providing the comfort and features expected in a luxury sedan. By leasing a car with better fuel efficiency, you can reduce your overall running costs, making novated leasing a more affordable option.
Fuel Efficiency Benefits of New Car Technology:
Better Mileage: Hybrid and electric cars can reduce fuel consumption by up to 40% compared to their petrol counterparts.
Cheaper Fuel Costs: EVs and hybrids reduce dependency on petrol, allowing drivers to save on fuel costs.
Bundled Running Costs: With a novated lease, all running costs—including fuel—are part of your fixed weekly payment, making budgeting easier.
With the right car technology, novated leasing helps you get the most out of your vehicle while reducing long-term costs.
Final Thoughts
With the rapid advancement of car technology, new cars are becoming more efficient, safer, and affordable. By opting for novated leasing, you can enjoy all these benefits—cutting-edge technology, reduced running costs, and the ability to own your car at the end of the lease term—while benefiting from tax savings and fixed weekly payments.
Get started today and drive into the future with the latest car technology. Novated Finance Australia makes this process seamless and easy, with approvals in under four hours and all-inclusive lease options!
Frequently Asked Questions
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Yes, hybrid and electric vehicles are eligible for novated leasing, and many of them come with FBT exemptions, further enhancing the savings.
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Cars with better fuel efficiency reduce your ongoing fuel costs, making them an ideal choice for a novated lease, especially if you drive frequently.
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No, you must pay the residual value (balloon payment) to own the car outright at the end of a novated lease.