Thursday, 24 January 2013

Using Novated Lease Calculators to Understand Savings Benefits




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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