Having a luxurious car is often considered an elegant lifestyle. A novated lease can help you to reduce the payable amount to own a brand new and shiny car in Australia.
All you need is to have a broad idea on novated lease and how it works.
What is a novated lease and how it works?
A novated lease, often called salary-sacrificing car, is an agreement between you, your employer, and a finance company.
Under a novated lease, an employee leases a car from a finance company for two to five years after the approval of their employer. The employer then makes regular lease repayments directly to the financier on the behalf of their employee, which is deducted from their salary before tax.
Your income tax is calculated on your new reduced salary. With a novated lease, you can save on tax on your salary as well as your purchased car. You can get both new and used car financed with a novated lease.
A novated lease has pros and cons and are no reasons to fear the risks associated with leasing. If you choose the right financial company wisely, you will never be deprived of novated lease benefits or shattered by its disadvantages.
Novated Lease pros and cons are clearly detailed on Bleen.com along with a comprehensive guide on novated lease. BLEEN is a part of a Flooring Domain located in the Queensland, Australia.
They have a directory of local businesses and services to help customers find a reliable service or product. It also helps you to save on your time searching for best deal. You can get many quick quotes online from different suppliers locally.
If you are employed and paid a salary regularly, a novated lease is the most cost-effective ways to finance a car. The lease repayments include the purchase price of the car, commission fees, and interest.
It may or may not include the running costs of the car, which includes fuel, services, registration, and insurance charges, based on the type of novated lease you have opted for.
Is a novated lease worth it?
While there are huge benefits of having novated lease, you do not have the ownership of the car with a novated lease.
Remember, you need to pay out the residual value after the lease term even if you lose the car or change your job.
Here are a few benefits of taking novated lease –
1. Possible tax benefits
Novated lease repayments are made from your pre-tax salary. This could decrease your taxable earnings. You could also prevent paying GST on the buying price of the car.
2. Consolidated payments
Awell maintained Novated lease helps to simplify and consolidate all your car expenses into a one time monthly payment. It keeps you hassle-free from juggles of multiple bill payments.
3. Opportunity to upgrade
You can trade in your vehicle at the end of the lease for a newer or different model without worrying to sell your old car.
At the end of the lease, you have a small amount remaining, called as the residual or balloon value, which is usually lower than the market value of your car at the time.
So, you can sell the car to pay your residual or get a new lease for a new car and even upgrade your existing lease.