There seems to be some confusion around exactly what a novated lease is.
We got an email in the other day asking us for some clarification around whether a novated lease was a good fit for a prospective car buyer.
So, we thought why not try and clear up the situation with some points on what exactly a novated lease is?
Firstly, no, a novated lease is not for everyone.
A novated lease is different to a standard car loan where you are required to make the payments.
With a novated lease the loan repayments are made directly by your employer.
However, despite there often being good tax implications for employers, not every business will offer you the option.
So, first thing to do is clarify whether a novated lease option is available to you at work.
If you work for a business that offers the option though, then it certainly is worth investigating.
Why? Well, a Novated lease by Stratton Finance will enable you to have your car loan amount paid for out of your pre-tax salary.
That means instead of getting paid, paying tax, then paying your car loan, with a novated lease you taxable income is reduced.
This should help you avoid handing over some of your hard earned dollars to the tax office.
Another possible saving can come from financing the maintenance costs of the vehicle through the novated lease.
Why pay for servicing and new tyres out of your after-tax pay packet? That makes no sense.
Chances are you might also be paying less per month for your new set of wheels with a novated lease.
With a standard car loan you pay the full amount of the loan, plus interest, over the term of the agreement.
But, opt for a novated lease and you’ll likely have lower monthly repayments because there’s a ‘balloon’ (or lump sum final repayment) at the end of the agreement.
This allows you to have the flexibility of selling or trading in the vehicle or paying the amount and keeping the vehicle.
Want more info on car finance options? Check out https://www.strattonfinance.com.au/.
So there you have it, a quick guide to novated leases, we hope it was helpful.