This article is part of our “being smart with your salary” series, a series of articles created to provide simple and easily understood answers to many frequently asked questions about Salary Packaging. For a simplified discussion or quoting on Salary Packaging that is easier to comprehend, contact Motor Vehicle Solutions on (03) 9682 7580.
Although many customers are required by their employer to use a particular Salary Packaging company, many do not realise that these companies are only contracted to maintain your Salary Packaging account. Many Salary Packaging companies try to sell products to their customers to increase their profits, but contractually, you are only obligated to have your Salary Packaging company administer your account. In all other aspects, you have many more choices available to you.
You are only required to use your Salary Packaging company to maintain your Salary Packaging agreement, and you are not required to purchase the items you wish to Salary Package through them. These items, such as a vehicle, comprehensive insurance, finance, extended warranties etc. can all be purchased independently, and can help you save even more money.
Below are some of the most common misconceptions we hear from customers when they do not truly understand the choices that are available to them through Salary Packaging.
I have to purchase and finance the vehicle I Salary Package through my Salary Packaging company:
You are able to purchase and finance a vehicle, and any other fringe benefit, through the company that offers you the best deal, and just utilise the Salary Packaging company as an account manager.
There may be some level of convenience with purchasing the asset through your Salary Packaging company, but there is no requirement to do so if they are considerably more expensive. Customers should ensure they receive the best deal available to them.
Most Salary Packaging companies have expanded into retail sales in order to increase their profits. However despite the sales tactics used, or what the salespeople may say, you are not required to purchase a vehicle or other fringe benefits through them. You should accept the most competitive quotes for the vehicle and the finance regardless of who it is through, and use the Salary Packaging company for their contracted purpose.
You also have the option to Salary Package your existing vehicle to save GST and income tax on the running costs of your vehicle.
Some Salary Packaging companies will even present their quotes in a way that makes their prices look better against competing quotes than they actually are. For more information on this, read our previous article on the use of the term ‘FBT base price’ by Salary Packaging companies.
I have to buy warranties and insurances for my vehicle through my Salary Packaging company:
Many Salary Packaging companies also look to increase their profits through selling customers extra insurances and warranties. However you are not required to accept any of their extra insurances or warranties if you do not want that product, or if you have received a better price from another insurance provider.
You can substitute any of the insurances or warranties offered by your Salary Packaging company for similar products offered to you at a more competitive price elsewhere.
You have more choices than you think when it comes to Salary Packaging, even if you are required to Salary Package with a certain company. While Salary Packaging is a great and cost-effective way to buy a new or used vehicle, you should still ensure you receive the best prices available to you to maximise the potential benefit of your Salary Packaging agreement.
By remembering that it is YOUR money, and you have more choices than you think when it comes to Salary Packaging, you can ensure that you receive the best potential benefit out of your Salary Packaging agreement.
Are you being smart with your salary? For more un-complicated answers to your Salary Packaging and Novated Lease questions, call Motor Vehicle Solutions on (03) 9682 7580 or CLICK HERE to discuss how you can get the most out of your Salary Packaging agreement.