Drive a Tesla with a Novated Lease & Save Big

The allure of driving a Tesla - a brand synonymous with cutting-edge technology and sustainable energy - is undeniable. However, the premium price tag can be a barrier for many prospective owners. Fortunately, a novated lease offers a tax-effective solution to make owning a Tesla more attainable.

A novated lease is a three-way agreement between an employee, employer, and a finance provider. It allows the employee to lease a vehicle with payments made from their pre-tax salary. This arrangement reduces taxable income and simplifies vehicle ownership by bundling expenses into a single payment.

In this guide, we'll explore how a novated lease can significantly lower the costs of driving a Tesla. We'll explore the benefits, outline the steps to set up a novated lease and provide strategies to maximize your savings. Additionally, we'll highlight how Novated Finance Australia can assist you in navigating this process to ensure a seamless and financially advantageous experience.

Understanding Novated Leasing and Its Benefits

A novated lease is a salary packaging arrangement that enables employees to finance a vehicle through their employer, with lease payments deducted from their pre-tax salary. This structure offers several financial advantages, particularly when acquiring a high-value vehicle like a Tesla.

Key Benefits of a Novated Lease

Here are the benefits;

1. Tax Savings: By making lease payments from your pre-tax income, you reduce your taxable salary, leading to potential tax savings.

2. Bundled Vehicle Expenses: A novated lease can include not only the lease payments but also running costs, such as maintenance, insurance, and registration, consolidated into a single, manageable payment.

3. No Upfront Costs: Typically, a novated lease does not require a substantial upfront payment, making it easier to access a premium vehicle without a significant initial outlay.

4. Flexibility at Lease End: After the lease term, you can pay the remaining amount to own the vehicle fully.

Why Choose a Tesla for Your Novated Lease?

Tesla vehicles are renowned for their innovative features, impressive performance, and commitment to sustainability. Opting for a Tesla through a novated lease allows you to enjoy these benefits and aligns with a cost-effective financing strategy.

Step-by-Step Guide to Setting Up a Novated Lease for a Tesla

Embarking on a novated lease for a Tesla involves several key steps to ensure a smooth and beneficial arrangement.

1. Confirm Employer Participation

Before proceeding, verify that your employer offers salary packaging options, including novated leases. Engage with your Human Resources or payroll department to understand the policies and procedures in place.

2. Assess Your Financial Situation

Evaluate your financial standing to determine the affordability of lease payments. Consider your current income, existing financial commitments, and long-term financial goals.

3. Select Your Tesla Model

Choose the Tesla model that best suits your preferences and needs. Tesla offers a range of models, each with distinct features and price points. For instance, the Model 3 is popular for its balance of performance and affordability.

4. Obtain Lease Quotes

Contact reputable novated lease providers to obtain quotes tailored to your selected Tesla model. Compare the terms, interest rates, and included services to identify the most advantageous offer.

5. Finalize the Lease Agreement

Once you've selected a lease provider, work with them and your employer to finalize the lease agreement. Ensure all terms are clearly outlined, including the lease duration, payment structure, and end-of-lease options.

6. Take Delivery of Your Tesla

After completing the necessary paperwork, arrange for the delivery of your new Tesla. Familiarize yourself with the vehicle's features and enjoy the driving experience.

Maximizing Savings with a Tesla Novated Lease

To fully leverage the financial benefits of a novated lease for your Tesla, consider the following strategies:

1. Optimize Lease Term and Residual Value

Selecting an appropriate lease term and residual (balloon) payment can significantly impact your monthly payments and overall cost. A longer lease term may reduce monthly payments but could increase interest costs. 

Conversely, a shorter term increases monthly payments but reduces total interest paid. Align the lease term with your financial objectives and anticipated vehicle usage.

2. Include Running Costs in the Lease Package

Incorporating running costs such as maintenance, insurance, and registration into your lease package simplifies budgeting and may offer additional tax advantages. This approach ensures that all vehicle-related expenses are managed efficiently through pre-tax salary deductions.

3. Monitor Fringe Benefits Tax (FBT) Implications

While electric vehicles like Teslas may be eligible for FBT exemptions under certain conditions, staying informed about current regulations is essential. 

Consult with your employer or a tax professional to understand how FBT applies to your novated lease and explore strategies to minimize potential liabilities.

4. Leverage Government Incentives

Stay updated on federal and state government incentives for electric vehicles, such as rebates or tax credits, which can further reduce the cost of owning a Tesla. Many regions offer financial incentives to encourage the adoption of EVs, which may lower your overall lease cost.

5. Monitor Your Lease Inclusions

Review your lease inclusions regularly to ensure you’re maximizing value. Confirm that you're using these benefits efficiently if your lease covers maintenance, servicing, and insurance. Keeping up with scheduled services ensures your Tesla remains in top condition and avoids unexpected costs.

End-of-Lease: Owning Your Tesla with a Balloon Payment

After your novated lease, you must make a balloon payment to take full ownership of your Tesla. Planning this payment ensures a smooth transition from leasing to ownership.

How to Prepare for the Balloon Payment

Here is how to prepare for payment at the end of the lease term;

1. Set Aside Savings During the Lease Term

One of the best strategies is to gradually save for the balloon payment over the course of the lease. Setting aside a small amount each month can reduce financial strain when the final payment is due.

2. Explore Refinancing Options

If you don't have the funds readily available, refinancing options may be available to help you manage the balloon payment. Some financial institutions offer specific loan products to assist in this process.

3. Ensure a Smooth Ownership Transition

Once the balloon payment is made, the vehicle is officially yours. You can continue driving your Tesla without ongoing lease obligations and enjoy the long-term cost savings of owning an electric vehicle.

How Novated Finance Australia Helps You

Navigating the novated leasing process can seem complex, but Novated Finance Australia simplifies every step to ensure you get the best deal. Our expert team helps you:

• Choose the right Tesla model that fits your budget and salary packaging arrangement.

• Structure your lease for maximum tax benefits and cost savings.

• Manage lease inclusions to handle servicing, insurance, and other running costs efficiently.

• Prepare for the balloon payment with financial planning support.

With Novated Finance Australia, securing a Tesla through a novated lease is simple, cost-effective, and hassle-free. Contact us today to start your leasing journey.

FAQs

• 1. Can I get a Tesla on a novated lease if my employer doesn’t offer salary packaging?

  Novated leasing is only available if your employer provides salary packaging options. However, other financing solutions may be available if your employer does not participate.

• 2. What happens if I leave my job during the lease?

  If you change employers, your new employer must agree to take over the lease payments. If they do not, you must continue paying the finance provider directly.

• 3. Can I include charging costs in my novated lease?

  While charging costs are generally not included in a novated lease, some providers offer reimbursement options for home charging installations as part of the package.

• 4. Is the balloon payment mandatory?

  Yes, the balloon payment must be made at the end of the lease term to take full ownership of the Tesla. Planning can help ensure a smooth transition to ownership.

• 5. Can I choose any Tesla model for my novated lease?

  You can select any Tesla model available in Australia, provided it fits within your salary packaging limits and lease provider terms.