There is more to novated lease than most people know.
A novated lease is a salary package where employees can save money on car expenses. It is a useful financial tool for many Australian workers, but some may not know how it works. Here are some facts to help you understand novated leases better.
1. You can use a novated lease to purchase new and used cars. Whether looking for a brand-new vehicle or buying something used, your novated lease will cover the costs.
2. You’ll have to deposit your car, but it can be much less than what you would typically need to come up with for a traditional loan based on the Vehicle Solutions best novated lease calculator. The deposit amount depends on the cost of the vehicle and other factors, so you should talk to your novated lease provider to determine how much money you’ll need to put down initially.
3. You can also use a novated lease to cover other car-related expenses, such as registration fees, vehicle insurance, servicing and maintenance, and fuel bills.
4. The payments for your novated lease will come directly out of your salary before tax is applied, so you won’t have to worry about getting a loan or paying additional taxes on the money.
5. There are often no ongoing maintenance costs with a novated lease, as most vehicles will come with a manufacturer warranty that covers regular servicing and repairs.
6. Unlike traditional car loans, novated leases usually don’t require additional security or collateral. This can be beneficial for people who don’t have property to offer as collateral.
7. At the end of your novated lease, you may be able to purchase the vehicle outright, return it to the financier, or roll over the lease into a new contract with a different car.
Typically, a novated lease involves three parties: the employee, employer and financier. The employee agrees with their employer to have part of their salary package set aside for car expenses. This money is then used to pay off the lease over time. At the end of the contract period, the responsibility for the loan defaults back to the employee, who is responsible for paying the remaining balance.
Moreover, novated leases are useful because they allow you to save on taxes. Because the payments for the lease come out of your salary before tax is applied, you’ll end up paying less overall than if you borrowed money from a traditional lender. That means that novated leases can be beneficial even if you don’t need a new car immediately; you’ll save money in the long run.
How to Get a Novated Lease?
You’ll need to contact a financier to discuss your needs for a novated lease. From there, the financier will draw up a contract outlining the lease terms based on the Vehicle Solutions best novated lease calculator. Once approved, you can start making payments and enjoy all the benefits of owning a car without breaking the bank.
To be eligible to get a novated lease, you must have a regular income and be employed by an approved company. Your employer must also agree to the salary sacrifice arrangement and submit all relevant paperwork.
How Long Does a Novated Lease Go?
The length of a novated lease can vary, depending on your needs. Typically, you can select a term of three, four or five years. Generally speaking, the shorter the term, the higher your monthly payments will be. However, shorter terms also mean you’ll pay off the car quickly and move on to a new one or enjoy debt-free freedom.
You can also opt for a flexible novated lease, which allows you to make extra payments or pay the balance off early. This is a great option if you’d like to save money on interest or upgrade sooner than expected.
Consider a novated lease if you want to save money on car expenses. This salary packaging option is often more reasonable than hiring purchase contracts or traditional loans. Research and seek guidance from your financial advisers and employer to determine whether it suits you. Novated leases provide Australians who are mindful of their finances with an excellent method of purchasing cars without incurring significant debt. If you’re looking for a straightforward and economical way to own your ideal car, a novated lease may be worth looking into.
With all this information, we hope you better understand what a novated lease is and how it works. If you think a novated lease could benefit you, get in touch with your employer or a financier to discuss the details of setting up your salary package.