A novated lease is an agreement entered by an employer and the employee regarding the lease of a vehicle and its eventual ownership. The difference between the typical car loan and that of a novated lease is that the latter is a tax-effective agreement. The car is financed in such a way that the monthly payments, as well as the running costs, are deducted from before and after-tax salary.
By using a novated lease calculator online, you will understand that it has several benefits that you never will get from a conventional car purchase. What happens is that the responsibility of the payment of lease rentals gets transferred or novated from you to your boss for the term of the agreement. Your employer will be making the deductions on your payroll, which means he will pay the lease rentals and operating costs straight out of your salary. In other words, you no longer will carry the burden of finding money each month to cover for the monthly payments and the running costs. You still are ultimately responsible for the payments under the lease in case you decide to part ways with the employer or if the employer, unfortunately, can no longer make the payments.
So, what is included in a novated lease that will convince you to grab the opportunity? But before you study and weigh on the possibility, the first thing you must do is compute the possible payments via a novated lease calculator and figure out if it is a worthy investment. Once you’re done with it, the next step is to read the inclusions below:
- The first thing you will get is the vehicle. You can choose whatever car you fancy. You can pick a brand new or used vehicle. You should seek help from a financing institution to get the best deal for a vehicle you are targeting.
- Next to the vehicle is the fuel expense. Yes, part of the agreement is that the pre-tax salary deductions cover your fuel costs. In other words, you use your vehicle without the need to pay for fuel using cash.
- Aside from the car and fuel expenses, the novated lease also covers the repair and maintenance of your vehicle. The partner company in the contract will supply the qualified and certified mechanics.
- Registration of your vehicle, as well as comprehensive insurance, are likewise covered.
Well, it wouldn’t hurt to assume that there are numerous advantages and benefits of availing a novated lease. The truth is you never can resist the idea of owning a vehicle minus the running and maintenance costs. You do not even have to worry about the fuel expenses! But then again, you also must recognise that a novated lease is not for everyone.