The Important Things You Should Know About Novated Leasing

The reason why you’re here is that you are intrigued about the prospect of a novated lease. You probably have heard Novated Lease Calculator Adelaideabout it with some of your co-workers talking about using a novated lease calculator Adelaide –, or perhaps a friend told you about it. You always wanted to get a car, but your finances do not allow it, at least for now. Since there are a lot of complicated things involved in a traditional car purchase, you are forced to look for other options; and this is where a novated lease comes in.

In the conventional way of buying a car, there are two parties involved: the buyer and seller. In a novated lease, you introduce another party, which in this case is your employer. Although the idea of you paying for something you do not own seems impractical and stupid, to say the least, the thing is leasing instead of buying a new car, in fact,can save youmoney down the road.

You already know by now that paying a regular loan means using your post-tax salary. In other words, you pay with what remains in your bank account once you paid your tax. A novated lease, on the other hand, means that you pay for the car before paying your tax. Many Australians choose a novated lease since they feel like it is advantageous to them. The truth is it is indeed beneficial since it gives you another option in getting a new car by way of paying for your vehicle through salary packaging. It means your employer pays for the monthly car payments for you via your pre-tax earnings.

In the majority of instances, a novated lease agreement can go for five years, after which you have the freedom to trade your car for a new model and a new lease or pay a buy-out fee and keep the car. Now if you are not sure as to what you are getting through a novated lease that you won’t get in a typical car loan, well, think of it this way: the usual car loan uses your post-tax salary for payment, while novated lease uses your salary right before you pay tax. The most straightforward interpretation of the concept is that you allow your money to go further and at the same time, you lower your taxable income since there already is a deduction for paying the car.

Be reminded that a novated lease is not the same as that of renting a car. It involves you, the fleet provider, and your employer. It benefits everyone since your employer leases a vehicle on your behalf, while the payments arebecoming your responsibility. Best of all, if you acquaint yourself novated lease calculator Adelaide –, you will realise that it is, in fact, the best option you have since the computation includes running expenses and maintenance covered by your pre-tax salary.