Learn What You Need to Know About Novated Leasing

Learn What You Need to Know About Novated Leasing

Novated Leasing - A new lease is one of the most cost-effective and easiest ways to lease a new car, and it is not necessary to earn a high executive salary. It is a three-way agreement between a financier, employee and employer. Here is an overview of this type of lease package:

How does it work?

The new lease is likely to run for a period of two, three or five years. Once the lease period has expired, it is possible to upgrade the lease for a newer model or, if desired, pay a buyout to take full ownership of the vehicle.

This type of lease package has several advantages and differs from a typical car loan. The new lease is paid using your pre-tax salary, which means that your money has the potential to continue and is useful for reducing a person's taxable income. On the other hand, the regular loan uses your salary after tax.

The actual process for the employee is relatively simple. Most companies have set up a system to let employees enter a lease term, car type and current salary to give a clear indication of the options available.

What are the advantages?

Tax effective - a major advantage of the new lease is that it is so effective and you can pay the car and operating costs with pre-tax income.

More purchasing power - the possibility of leasing through a fleet company will certainly offer a greater choice in the type of car you can drive. The discount possibilities of using a fleet provider are much more competitive compared to what you could get if you walked into a dealer yourself.

Easily upgrade your car - another major positive point is the ability to change vehicles once the lease period expires. This type of flexibility is great for drivers who always want to drive the latest models.

Service Requirements - this package type is also useful for managing all your service requirements. The costs for the maintenance of the vehicle are often included as part of the lease package.

Are there any risks

In addition to many different benefits, there are also some potential pitfalls that are worth considering. For example, it is essential to have job security to ensure that this type of lease stays in place. In addition, the tax benefits of a new lease have been slowly declining in recent years.