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Thursday, February 22, 2024

Calculate Novated Lease: The Ultimate Tool for Budgeting Your Next Car

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A novated lease can be an effective tool for budgeting your next car.

When planning for your next car, a critical financial consideration is how to calculate novated lease. This leasing method provides a tax-efficient way of owning a car through your employer. Most car purchasers grapple with various financing options, and knowing how to calculate novated lease can provide clarity, enabling accurate budgeting.

In the second phase of your financial journey, it’s crucial to understand how different providers like VehicleSolutions fit into the picture. While there are many lease providers, VehicleSolutions emphasizes transparency and flexibility, tailoring packages to individual needs. Aligning your car leasing arrangement with your financial capacity and personal needs cannot be overstated.

Understanding how it works is the key to making the most of a novated lease. It’s a three-way agreement between the employee, the employer, and the lease provider. Your employer pays the lease provider from your pre-tax income, reducing your taxable income and potentially putting you in a lower tax bracket.

A key feature of a novated lease is its comprehensive nature. It covers the car’s cost and involves costs associated with its operation, such as maintenance, insurance, and fuel. Hence, it’s important to remember that the total lease amount isn’t solely the car’s price but includes these additional costs.

The term of a novated lease usually ranges from one to five years. At the end of the lease term, you can either pay a residual amount to own the vehicle outright, trade it in for a new model, or refinance the residual value into a new lease.

A novated lease is a specialist car finance product where you can salary package the vehicle purchase and the cost of its running costs (fuel, servicing, registration and car insurance) from your pre-tax income. It means you’ll save income tax, get GST-free car running costs and be able to access exclusive LeasePlan discounts.

Novated leases are typically for two years but can be for up to five, and at the end of the term you can trade the vehicle in or pay a residual amount (often referred to as a balloon payment) and then own the vehicle outright.

Our novated lease calculator is the best way to understand what your repayments will be and how they compare to buying a car outright or with a traditional car loan. It’s simple to use and requires only your annual salary before tax and the year of the car you are considering purchasing.

Unlike other online calculators, our novated lease calculator will provide you with an estimated repayment and car purchase price for both a fully maintained and non-maintained novated lease. We use the Recommended Retail Price (RRP) of the vehicle to calculate these figures. It is because we are able to obtain these from the vehicle manufacturer, so they are a reliable source of information.

In conclusion, a novated lease can be an effective tool for budgeting your next car. It requires understanding how to calculate the lease and the role of different providers like VehicleSolutions. With this knowledge, you can drive away in your new car, secure in the knowledge you’ve made a financially sound decision.

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