Car Financing Options in Australia: What’s Best for You?
Buying a car is a significant financial decision, and choosing the right financing option can have a major impact on your long-term expenses. With so many options available—including novated leasing, car loans, and chattel mortgages—it can be difficult to determine which one offers the best value. For employees and business owners, novated leasing is often the most tax-effective and convenient way to finance a vehicle.
1. Overview of Car Financing Options in Australia
When financing a car, you generally have three main options:
| Financing Option | Best For | Tax Benefits | Ownership | Bundled Running Costs? |
|---|---|---|---|---|
| Novated Lease | Employees & self-employed | Yes – pre-tax savings | You own the car at lease-end | Yes |
| Car Loan | Employees & individuals | No tax benefits | You own the car immediately | No |
| Chattel Mortgage | Business owners only | Yes – tax-deductible for business | You own the car immediately | No |
2. Novated Leasing: The Best Option for Employees & Business Owners
A novated lease is a salary packaging arrangement where you lease a car using pre-tax income, reducing your taxable income and increasing your take-home pay.
Key Benefits:
- Pre-tax salary deductions = tax savings
- No GST on car purchase = 10% saving
- Includes fuel, rego, insurance, and servicing
- Flexible end-of-lease options
3. Car Loans: Traditional Ownership, Fewer Benefits
With a car loan, you borrow from a lender and pay it off over time. There are no tax perks and you’re responsible for all running costs. Explore car finance options.
4. Chattel Mortgage: Strictly for Business Use
A chattel mortgage suits business owners with an ABN. You own the car outright but can’t use it for personal travel without tax consequences.
5. Comparing All Options at a Glance
| Factor | Novated Lease | Car Loan | Chattel Mortgage |
|---|---|---|---|
| Tax Benefits | Yes – pre-tax | No | Yes – business use |
| Ownership | Lease-end | Immediately | Immediately |
| Running Costs Included | Yes | No | No |
| Personal Use Allowed | Yes | Yes | No |
6. How to Get Started
Follow these steps to begin your novated lease journey:
- Check if your employer offers salary packaging
- Select a vehicle – new, used, or electric
- Get a personalised quote from One Car Group
- Bundle your costs and enjoy pre-tax savings
Conclusion: Novated Leasing Wins
If you’re an employee or business owner, a novated lease offers unmatched tax savings, budgeting ease, and flexibility. It’s the smartest choice for your next vehicle.
Want to Know How Much You Can Save?
Contact One Car Group today to get your custom novated lease quote and see the savings for yourself.
