Novated leasing may not be a familiar concept or term to you right now, but we guarantee that it is one of the things you should consider learning. If you have been working for years now and you still are not confident about your capacity to buy a new car, then it is hard to blame since, especially considering the challenging economic times we all experience right now. However, it does not mean you give up on your dream.
In Australia, employees and workers like you have the luxury of getting a brand-new vehicle without taking the usual car financing route. There is a much better and reasonable alternative in the form of a novated lease. What is it and why should you seriously consider availing it? Well, let’s talk about what it offers you in this article.
First, you must familiarise yourself with the basic concept of a traditional car purchase before you use that novated lease calculator to compute the difference. The usual process of buying a car involves two parties – the buyer and the seller. The method is simple since you buy the car from the seller and the transfer of ownership follows. On the other hand, a novated lease appears more complicated than the traditional way, but the one thing you must understand is that it will benefit you on the get-go. In a novated lease, you introduce a third party to the deal, which in this case is your employer, who in turn will be paying the monthly dues for leasing the car you are driving. No, the employer won’t be paying it through his own money. Instead, he or she will cover the monthly payments through your salary. The most notable advantage or benefit of a novated lease is that you use pre-tax wage for paying the monthly dues. On the other hand, a regular car loan will use your post-tax salary.
Another benefit of choosing a novated lease in getting a new car is that you will pay for it through salary packaging. Aside from the fact that the deductions come from pre-tax earnings, which by the ways saves you thousands each year in tax payments, a novated lease also includes the option of paying for the running costs of owning a vehicle. In other words, you no longer must worry about where to get funds for fuel, registration, insurance, repair, and maintenance costs. You can pick an offer that allows you to cover everything in a single payment scheme.
If you are not sure how a novated lease benefits you, you can use a novated lease calculator that’s readily available online and compute the difference between it and a traditional car loan. The fact that the former is paid before you pay tax for your salary means you can save money on tax fees.