Why To Pick A Novated Lease
What pops to mind when you think of Oz?
The Land Down Under is home to many things, though one think you’re probably not thinking of is the Novated Lease Stratton Finance
What’s A Novated Lease?
Worthy of note is that the United Kingdom’s employers sometimes use the novated lease, although most instances of novated lease utilization comes in Australia.
A lease is an agreement, typically agreed to for a static amount of time, in which assets being rented are returned to the lessor (renter) following the lease’s end.
Novated lease agreements are ones offered primarily by Australian employers, in which they take financial responsibility for a vehicle their employee wants to lease. The employee gets to drive the vehicle they wish until lease end.
Why Bother With Going Through An Employer?
Millions of people lease cars every year in Australia. So, why bother with one’s employer as an intermediary between a vehicle lease and the employee?
Many people choose a novated lease, given their employers offer such a benefit, because leases through employers are cheaper, in effect, because payments are taken out of pre-tax dollars. Doesn’t make sense?
Let’s say a novated lease through someone’s employer on a 2001 ABC Defer (totally fictional car) costs $1,000 per month. An employee finds a 2001 ABC Defer in identical condition on their own, for just $925 per month.
If someone earns just 37,000 in Australian Dollars, the effective tax rate is 9.65 percent. So, the novated lease, which almost always offers more benefits to lessees than if they signed a lease outside of work, is paid before taxes.
37,000 – 12,000 = 25,000 in pay after the lease is paid.
Let’s take taxes out, then pay the employee’s lease outide of work.
37,000 – 3,570.50 = 33,429.50 after taxes.
33,429 – (925 * 12) = 22,329 in take-home pay. And that’s not even considering sales tax of roughly 10 percent that’s added on to every lease payment.
The Many Benefits Of A Novated Lease
As already covered, there aren’t any sales taxex enacted on the payment of novated lease agreements. The same goes for any gasoline, insurance premiums, and maintenance fees that Toyota Finance Stratton car drivers can never avoid.
Employers are able to get their corporate hands on just about any vehicle imaginable, given you’re in a position to reasonably pay for it. They have tons more money to go around than virtually every individual in Australia – or whatever country in question – does. Better vehicles come through the novated lease process