Novated leases can be a daunting agreement
if you are unaware of the specifics involved. Although they can seem
complicated on the surface, they are actually a fairly simple agreement that
can result in large savings over the term of the lease. Using a Novated Lease
Calculator, free tools that are often found on lease providers’ websites, are a
great way to make sense of novated leases and quickly ascertain how much you
can save.
Novated leases explained
Novated leasing is basically an agreement
that allows you to lease a vehicle of your choice, and make the payments for
the car and related running costs (excluding GST) from your pre-tax salary.
This means that you reduce your taxable
income, as your instalments are deducted from your pre-tax salary. Novated
leasing therefore means you pay less tax, and possibly increase your take-home
pay. In some cases you may also be able to move into a lower tax bracket, which
is an appealing prospect for everyone!
Novated leases are a three-way agreement
between you (the employee), your employer and the designated financer. In this
simple process, the novated lease provider arranges the finance for your chosen
vehicle. Your lease repayments and running costs are then invoiced to your
employer, who then deducts the amount from your pre-tax salary.
Benefits of using Novated Lease Calculators
There are many benefits of using a novated
lease calculator, the main one being it gives you a clear overview of the
costs and savings involved in leasing. Whilst all calculators will produce
different results, most give you approximate figures for what you can expect to
pay weekly or monthly, and how much you can save either annually or per term.
Some calculators are also able to provide
more detailed results, such as comparing leasing your vehicle with other
financing methods as well as other costs and expenses involved.
Information the calculators require
Another great thing about novated leasing
calculators is that you don’t have to provide a lot of detailed information to
get an idea of how much you can expect to pay and save. Simply entering:
·
The type of car you plan to
lease – small city car, family SUV, luxury sedan, etc.
·
How long you plan to lease the
car for – usually somewhere between one and five years
·
An approximate kilometre figure
for how much you plan to drive annually
·
Your annual salary –an
approximate figure will do
Even better, you don’t even have to know
the answer to all these questions in order to use the calculators – if you play
around with the different options you can see which combinations result in the
greatest savings!
Summary
If you are looking at getting your new car
through novated leasing, it would be wise to consider all your purchasing
options and what would work best for your circumstances. If free tools such as
this are on offer, why not use them? Especially when they can help you clearly
work out how much the lease will cost and how much you can save buy leasing
your car instead of buying it outright.
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