What you need to know about Novated Leasing

What you need to know about Novated Leasing

Leasing: A new lease is one of the most cost effective and easiest ways to lease a new car, and there is no need to earn a high executive salary. It is a threefold agreement between a financier, employee and employer. Here is an overview of this type of lease package:

How does it work?

The renewed lease probably runs 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 lump sum payment to acquire full ownership of the vehicle.

This type of lease package has several advantages and is different from a typical car loan. The new lease is paid with your pre-tax salary, which means your money can go further and be useful for lowering 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 step into a desired lease term, car type and current salary to provide a clear indication of the options available.

What are the advantages?

Fiscally effective - a major advantage of the renewed lease is that it is so effective and you can afford the car and running costs with pre-tax income.

Increased purchasing power - the ability to lease through a fleet provides a wider choice of the type of car you can drive. The discount options from using a fleet provider are far more competitive than what you could get if you just walked into a dealership.

Easily upgrade your car - another big plus is the ability to change cars as soon as the lease period ends. This type of flexibility is great for drivers who always want to ride the latest models.

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

Are there any risks?

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