Top Toyota Models for Novated Leasing in Australia

Novated leasing has become a popular vehicle financing option in Australia, allowing employees to lease a car through salary packaging. This arrangement offers potential tax advantages, convenience, and the flexibility of choosing a range of Toyota models. Known for its reliability and variety, Toyota provides vehicles that fit various needs, from efficient commuting to family travel. 

This blog will walk you through the benefits of novated leasing, how Toyota models can suit these needs, and essential financial aspects to consider.

What is Novated Leasing?

A novated lease is a three-way agreement between an employee, employer, and a finance company. Lease payments are deducted from the employee's pre-tax salary, which can lower their taxable income. At the end of the lease term, the employee can typically own the vehicle by paying a residual value, per Australian Taxation Office (ATO) guidelines. 

Here's how novated leasing works:

• Salary Packaging and Tax Savings: Since lease payments are made from the pre-tax portion of an employee's salary, this setup effectively reduces taxable income.

• All-Inclusive Payments: Novated leasing bundles expenses like fuel, insurance, and registration into one manageable monthly payment, simplifying budgeting.

• Vehicle Ownership: Employees can choose to own the car at the end of the lease term by paying the residual amount. This is especially advantageous when compared to other leasing models that may not offer an ownership option.

Novated leasing also allows employees to drive either a new or used car, provided it's no more than 15 years old at the end of the lease term. This offers flexibility to select models that suit their lifestyle and financial plans.

Benefits of Novated Leasing

Novated leasing provides an accessible pathway for employees to drive quality vehicles with financial advantages that extend beyond standard car loans. 

Here are some notable benefits:

• Tax Savings and Salary Packaging: Novated leasing can lower taxable income as a salary-sacrifice arrangement, which often results in tax savings compared to financing or cash purchase options.

• Affordable Access to New or Premium Models: Leasing enables employees to afford newer or higher-end models, which might otherwise be costly to purchase outright, especially with the luxury car tax threshold now set at $91,387.

• Ease of Budgeting: Bundling vehicle expenses, including servicing, insurance, and fuel, into a single monthly payment simplifies budgeting. This structure predicts monthly costs, avoiding sudden expenses for routine vehicle maintenance.

• Flexibility with Used Vehicles: Employees can lease used vehicles under 15 years old, expanding choices for those who prefer reliable, high-quality used cars at an affordable price.

• No Upfront Deposit: Unlike many financing options, novated leases generally require no initial deposit, making it easier for employees to access a vehicle without impacting savings.

These benefits make novated leasing an attractive option for employees seeking a reliable vehicle with manageable costs and tax advantages.

Key Financial and Personal Finance Considerations

When considering novated leasing, it's essential to review the financial aspects unique to this type of vehicle financing:

• Luxury Car Tax (LCT) Threshold: If you're considering a premium model, the LCT threshold of $91,387, as of 1st July, may affect the lease costs. Selecting models within this threshold can help optimise your lease arrangement.

• Comparison with Cash Purchase and Mortgage: Unlike a mortgage or cash purchase, a novated lease leverages pre-tax dollars, providing significant tax benefits. Cash purchases require a large initial outlay, and mortgages, typically used for property, don't offer the same salary-sacrifice advantages for vehicle ownership.

• Residual Value Payment: As set by ATO guidelines, at the end of the lease term, employees are required to pay the residual value to own the car. This payment serves as a final commitment to secure full vehicle ownership.

For those weighing these options, a novated lease provides financial flexibility by spreading costs over time and minimising the impact on personal finances.

Best Toyota Models for Novated Leasing

Toyota offers an array of models that cater to various preferences, from compact commuting vehicles to spacious SUVs. Here's a closer look at some of the top models:

Toyota Corolla

• Description: The Corolla is a compact car perfect for city driving, available in sedan and hatchback options.

• Features: Known for its fuel efficiency, spacious interiors, and advanced safety features.

• Why It's Ideal for Leasing: The Corolla is affordable, fuel-efficient, and highly reliable, making it a practical choice for everyday commuting. It can also qualify for FBT exemption discounts.

Toyota Camry

• Description: The Camry is a mid-sized sedan with a reputation for comfort and a smooth driving experience.

• Features: Offers a hybrid option, driver-assist features, and high fuel efficiency.

• Why It's Ideal for Leasing: The Camry Hybrid benefits from the electric car discount, offering an economical yet premium experience with advanced technology within a budget-friendly range.

Toyota RAV4

• Description: A compact SUV that balances space, comfort, and capability, suited for a range of driving environments.

• Features: Includes hybrid options, a spacious cargo area, and an AWD variant for varied driving conditions.

• Why It's Ideal for Leasing: The RAV4 Hybrid variant, with plug-in hybrid electric vehicle (PHEV) options, is fuel-efficient, powerful, and versatile, ideal for both city and weekend trips.

Toyota Kluger

• Description: A larger SUV offering roominess and power for families and adventure seekers alike.

• Features: Offers hybrid models, three-row seating, and ample cargo room.

• Why It's Ideal for Leasing: The Kluger is ideal for those needing extra space. It benefits from the electric car discount in hybrid models, making it cost-effective for larger households.

Toyota Hilux

• Description: A rugged ute known for durability, the Hilux is designed for heavy-duty use.

• Features: Available with diesel engines, a robust design, and high towing capacity.

• Why It's Ideal for Leasing: The Hilux offers versatility for both work and off-road environments, retaining substantial resale value and providing reliability under demanding conditions.

Toyota Land Cruiser

• Description: Toyota's iconic 4WD, celebrated for its durability and off-road performance.

• Features: High ground clearance, robust design, and advanced off-road features.

• Why It's Ideal for Leasing: Suited for adventurous drivers, the Land Cruiser's durability ensures it retains value, ideal for meeting the residual payment at lease end.

Toyota's Electric and Hybrid Options

With the demand for eco-friendly vehicles rising, Toyota has expanded its lineup to include battery electric vehicles (BEVs), hydrogen fuel cell electric vehicles (FCEVs), and plug-in hybrid electric vehicles (PHEVs). Models like the Camry Hybrid and RAV4 Hybrid offer electric car discounts, making them ideal for those looking to reduce fuel costs and carbon emissions. This shift towards sustainable models aligns with global trends and gives employees more choices in affordable, efficient vehicles through novated leasing.

Comparing Novated Leasing to Cash Purchase and Mortgage Financing

Understanding the differences between novated leasing, cash purchase, and financing options like a mortgage can help employees make an informed decision:

• Cash Purchase: While purchasing outright provides ownership immediately, it requires a significant upfront expense. In contrast, a novated lease spreads payments over time, allowing employees to retain more disposable income.

• Mortgage: Unlike a mortgage that builds equity over time, novated leasing focuses on affordable vehicle access, leveraging salary packaging. This setup offers flexibility and minimal long-term commitment.

• Tax Benefits of Leasing: By paying lease costs through pre-tax income, novated leasing can provide an effective cost advantage over financing a vehicle independently

  For employees seeking flexibility and financial efficiency, a novated lease is often a favorable choice over other financing routes.

The Role of a Novated Leasing Specialist

Navigating the intricacies of novated leasing can be complex, which is where a novated leasing specialist becomes invaluable. These professionals assist in selecting suitable models, understanding FBT exemption discounts, and maximising the benefits of salary sacrifice. They also manage administrative details, streamlining the leasing process and ensuring employees get the most value from their leasing arrangements.

If you’re looking for a reliable novated leasing specialist, reach out to Novated Finance Australia team now and let us handle the entire process for you, helping you enjoy a hassle-free drive in your preferred car!

Benefits of Choosing Toyota for Novated Leasing

Choosing a Toyota model for novated leasing comes with unique advantages:

• Resale Value: Toyota's reputation for durability means its vehicles retain high resale value, which is beneficial when it's time to pay the residual value.

• Comprehensive Dealer Network: With dealerships across Australia, Toyota owners enjoy easy access to maintenance and support.

• Reliability: Known for quality engineering, Toyota models offer peace of mind with lower repair costs over time, especially advantageous for multi-year leases.

• Wide Range of Models: From fuel-efficient hybrids to rugged utes, Toyota's lineup caters to various lifestyle needs.

Conclusion

Selecting a Toyota model through novated leasing offers Australian employees a flexible, cost-effective way to drive a high-quality vehicle while benefiting from salary packaging. From compact cars to spacious SUVs, Toyota's diverse range ensures a model for every preference. With potential tax savings, predictable costs, and flexible ownership options, novated leasing through Novated Finance Australia provides an excellent pathway to vehicle ownership that aligns with financial goals.

Ready to explore Toyota models for novated leasing? Novated Finance Australia simplifies the process, ensuring a smooth and transparent experience. 

Frequently Asked Questions

• Can I include Toyota hybrids or electric vehicles in a novated lease?

  Yes, Toyota hybrid and electric vehicles, such as the Camry Hybrid and RAV4 Hybrid, can be included in novated leases. These models often qualify for electric car discounts, making them a cost-effective choice for novated leasing.

• How does novated leasing affect my finances compared to a car loan?

  Novated leasing may provide tax advantages by using pre-tax income, which is not available with standard car loans. This setup can make novated leasing more budget-friendly than financing with after-tax dollars.

• What happens if I change employers while on a novated lease?

  If you change employers, the lease can often be transferred to your new employer, but you must coordinate with the leasing company. Alternatively, you may pay the residual value and own the car outright.

• Are there mileage restrictions with novated leasing?

  Generally, novated leases do not have specific mileage restrictions. However, high mileage could affect the vehicle's condition and resale value, impacting the residual value payment at the lease's end.

• Is insurance included in a novated lease payment?

  Yes, insurance is typically included as part of the bundled payment in a novated lease, along with registration, maintenance, and other running costs, making it easier to budget for all vehicle expenses in one payment.