calAn increasing number of employees are choosing to purchase vehicles using a novated lease. They are attracted by the unique benefits of this type of lease including the ability to significantly reduce their taxable income and having their choice of car rather than driving a company allocated one. But working out the details of a novated lease can be complex. Luckily novated lease calculators can quickly determine whether it is the right deal or not.
What Is A Novated Lease?
A novated lease is a form of vehicle leasing where an employee is able to purchase a new car using their pre-tax income. Using a novated lease employees are able to lower their taxable income and thereby increase the value of their remuneration package. Novated leases require a contractual agreement between the employer, their employee and financing company. While the employer leases the vehicle on the employee’s behalf, it is the employee who is responsible for the lease and must ensure that the payments are met.
In order to purchase a vehicle using a novated lease a finance company will first purchase the vehicle the employee wants. The employee will then pay the leasing company monthly repayments for the term of the lease while the leasing company pays for all of the running costs. This is typically between 3 to 5 years. When payment is made it is deducted from the outstanding balance which remains on the lease. On making the final payment the employee can choose to acquire the car for whatever the residual value is. All payments made to the finance company come from the employees pre-tax income.
How a Novated Lease Calculator Works
A novated lease calculator allows a customer to quickly and accurately assess the savings that they will make for specific vehicles using a novated lease. The novated lease calculator can provide the customer with the costs of the lease, the repayments they will need to make, and the residual value of the vehicle at the end of the lease. In addition, a novated lease calculator allows the employee to determine the benefits of long term versus a short term loan.
What You Need To Use A Novated Lease Calculator
Before you can use a novated lease calculator you will need some specific pieces of information. The more accurate the data you supply the better the results the calculator will be able to provide. This information includes the approximate type and price of the vehicle. Also required is the lease length, the fringe benefit tax calculation method used and the state the vehicle will be purchased in. Finally you will also need to provide your annual salary and how many kilometres you expect to drive each year. The latter is important as it helps establish the included running costs for each lease.
Get A Clear Estimation Of Savings Through Novated Lease Calculator
Novated leases are a smart way for employees to purchase a new vehicle. Novated leases allow employees to buy the car that they want using pre-tax dollars. Typically no deposit is required. However novated leases can be complex to calculate and are not suited to all car buyers. Novated lease calculators are a fast and reliable way for employees to approximate the cost and benefits of purchasing a car using this type of lease to help make an informed decision.