A novated lease refers to a three-way agreement that involves employers, employees, and financiers. Employers hire lease vehicles on their employees’ behalf. With a vehicle that is leased in your name along with running costs like fuel, maintenance, and insurance being included in the single lease repayment, you can lower taxable income and reduce tax payments. Several people continue to enjoy the benefits of novated leasing.
Choosing Novated Leasing
Novated leasing is a worthwhile choice that enables you to:
- Maximise income through tax advantages and enhanced purchasing power. This enables employees to take home a higher amount of pay by making the most of their salary.
- Novated leasing is simple to manage with easy repayments that cover the running costs and finance directly from salary and ease budgeting.
- Unlike the option of personal finance, you can achieve discounts on maintaining a used or new vehicle, running costs, fuel and the purchase price.
Novated Lease Calculators
- A novated lease calculator gives you insight into how affordable this leasing option can be. You will be able to see how much it will cost to get your new car when you have a novated lease. The calculator enables you to input the estimated car cost, annual kilometers, annual gross salary and lease term to calculate how much you can save and the impact on your salary.
- To find out how much you can actually save you can use a novated lease calculator or request a quote online.
- Novated lease calculators are available online for people to type in their salaries, desired vehicles and lease terms prior to calculating the lease payment and the amount of money that will be saved. Find a Novated lease calculator
Understanding Novated Leases
Novated leasing is usually the most effective way to finance a car that suits your lifestyle or family. It offers cost savings, choice, convenience and flexibility. The combination of transparency, tax savings and discounts makes the choice to novate with a reputable financier and access a great vehicle the best option.
How Novated Leases Work
- Conventional vehicle purchases involve sellers and buyers. Introducing your employer to the transaction gives you a way to save a fortune. Leasing instead of purchasing your next car can potentially save you a lot of money.
- A novated lease basically means that you introduce another party, which is your employer, to the purchase agreement. It gives you a way to make payments for your car through salary packaging. Your employer is responsible for making your car payments on your behalf out of pre-tax earnings.
- A novated lease agreement typically stretches for a number of years and you have the option of paying a buy-out fee that has been determined and keeping the bar or trading in the car for a newer one on another lease.
Novated Lease vs. Normal Finance
A novated lease will involve you, your employer and the fleet provider. It enables a business or employer to lease cars on their employee’s behalf. The key difference between normal finance and a novated lease is that your car payments and running costs are taken from the pre-tax salary and there will always be a benefit regardless of the sale of tax that you pay.