Everyone dreams of owning a private car. However, how long it takes to realise that dream and how you finance the project is an individual decision. While most people will save for many years before they can own a car, others will use shortcuts and get a car loan to buy their dream car.
Although buying a car from your own saving the best thing to do, getting a car loan is gaining popularity today, and it is an option that you can choose. When it comes to car loans, you can get a bank car loan, or you can opt for novated lease deals. By far, novated leasing is the best way to go as with bank financing. You will have to deal with high interests which can sometimes skyrocket the interest.
Novated lease is referred to as salary packaging a car, as the employer plays a role in the leasing process. In this kind of leasing, there are three bodies involved in the agreement, the employee, the employer and the company that leases the car. Novated lease is the ideal way for the employee to save a lot of money, which is the reason behind the popularity of novated lease deal. The employee has the instalment payments for the car deducted from their salary before tax, and the employer will maintain a separate account.
There are many advantages to a novated lease deal, such as short-term needs. If an individual is on the market for a vehicle that will be used for just a few years, then this is a means to guard against depreciation losses and the person will not have to worry of selling the car. The agreement is simple, and when the person decides that the no longer need the car, they return it, and the deal is over with no penalties.
Another benefit novated leasing is that the employee does not have to worry about insurance fees, registration, and other running costs. There are factors that save the employee a great deal of money and time and are handled by the leasing company, which is a great advantage to individuals as they do not have the expenses of the problems that come with car ownership.
Tax is another benefit. Since the repayments are deducted before tax, the employee will pay less fee, and this means that they will take more money home. As per the employer, he/she will benefit in the sense that he/she is motivating the employee and hence high productivity.