Novated Lease Sydney and rookies help and advice on Novated Leases
kristinebates on March 25, 2012 in Uncategorized | No Comments »Novated Lease Sydney’s informative tips on Novated Leasing and a selection of the misunderstandings about this vehicle leasing product.
You may have however heard about Novated leasing. It is possible you have family members, close friends or associates who have all ready financed a motor vehicle in this format. They could possibly have discussed how difficult to understand it is but in fact if you do your due diligence and converse with Novated Lease Sydney brokers who understand or know the process you will quickly and easily break the myths. Novated leasing is frequently being utilised by health industry professionals, public servants, teachers, mining workers and there are a lot more private business owners who appreciate that providing Novated leasing to their staff is like furnishing them with a pay increase without the need to physically pay any extra cash. A Novated lease is a finance lease which has a novation agreement included. This obligates your employer to deduct lease payments from your take-home pay and remit automatically to the loan provider or fleet broker. This then make available some tax advantages.
Novated Leasing is transforming into more commonplace as you can finance a motor vehicle for personal or business use and have it salary sacrificed from your wage. This will mean that you will pay reduced tax. In addition to this you can also salary sacrifice your running costs such as insurances, registration, fuel, tyres, routine maintenance and routine services. When you add up the all round monthly payment of your lease and funds to run your car every wage cycle, the tax savings you make can be quite appealing. Don’t forget under a Novated lease you don’t need to be using your car for business use.
You are likely to be asking how a Novated Lease actually works. The technical details will be left for another Novated Lease Sydney blog but importantly your lease and running costs are precalculated into a weekly, fortnightly or monthly depending on your pay cycle amount. The total amount of kilometres you drive will help calculate how much of this amount is taken out of your pre-tax salary and how much is taken out of your after tax wages. The pre tax payments are where you save real money and the savings can be very significant. Novated lease brokers can present you with estimates to demonstrate to you how much you will save and of course how much the motor vehicle will cost you. You will be thrilled.
Due to the tax effective framework of Novated leases the product make up is in part prescribed by the Australian Taxation Office. This means that depending on your lease term, you are required to have a balloon repayment at the end of the term. A residual is a lump sum still required at the end of the lease in order for you to own the motor vehicle outright. These balloons are based on different percentages based upon on the lease term. For example on a five year term the residual is 28.13%. At the end of the lease term you have three alternate options.
You can ask Novated Lease Sydney or the funder to re-negotiate the residual for a n additional period of time, dispose of the vehicle and pay it out or trade it in for a new vehicle.
So you most likely will ask if I lease the motor vehicle do I completely own it? Great question. The car is registered in your name and you will have all the owners rights to sell at any time. Technically, according to the lease documentation you are leasing from the bank or finance company but at the conclusion of the lease you have the choice to pay a sum to have title the vehicle outright. Novated Lease Sydney nor Banks and lending employers are not in the business of puchasing and selling motor vehicles so at the conclusion of lease term it is assumed that you take ownership of the car or manage to sell it.
Next Blog: Clarifying the misguided beliefs about Novated Leasing and finding out the basic facts
