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If you’re in the market for a new car and looking for a cost-effective way to finance it, a novated lease might be the perfect solution. But how do you know if a novated lease is the right financial decision for you? That’s where a novated lease calculator comes in handy.
In this guide, we’ll explain how to use a novated lease calculator in Australia, why it’s an essential tool when considering a novated lease, and how it helps you make informed financial decisions. Whether you’re exploring options for a novated lease or comparing lease costs with traditional loans, a novated lease calculator can give you the clarity you need.
What is a Novated Lease?
Before diving into how the calculator works, it’s important to understand what a novated lease is. A novated lease is a type of salary packaging arrangement where your employer deducts car lease payments from your pre-tax salary. This reduces your taxable income and could result in you paying less tax overall.
Here’s how a novated lease works:
- You choose your car: Whether it’s a brand-new vehicle or a used one, you get to pick the car that suits your needs.
- Lease payments come from pre-tax income: Your employer makes the lease payments directly from your salary before tax, lowering your taxable income.
- Bundled car expenses: Fuel, insurance, maintenance, and registration can all be included in your lease, meaning one simple payment covers all your car-related costs.
This setup is particularly beneficial because it provides substantial savings and removes the headache of dealing with multiple car-related expenses.
Why Use a Novated Lease Calculator in Australia?
A novated lease calculator is an essential tool for anyone considering leasing a car, as it helps you estimate the total cost of the lease and compare it with other financing options.
The calculator allows you to input details such as the price of the car, lease term, payroll cycle and state of registration. This gives you a clear picture of how much you’ll be paying and how much the lease will cost over the term.
Key Benefits of Using a Novated Lease Calculator
1. Estimate Your Weekly/Fortnightly/Monthly Payments
One of the main advantages of using a novated lease calculator is that it gives you an estimate of how much your payments will be. This makes it easier to budget and ensures you choose a lease that fits your financial situation. You’ll be able to see how different factors, such as the length of the lease or the car’s price, affect your payments.
2. Compare Lease Options
A novated lease calculator is a great way to compare different novated leasing options. Whether you’re considering a novated lease through your employer or weighing different vehicle options, the calculator allows you to input various scenarios.You can adjust the lease term to see how the changes impact on your payments.
Play around and see how much different vehicles will cost you, a vehicle that may have been out of reach before can suddenly look more attractive when you have all the information.
3. Understand Residual Value
At the end of a lease, the car will have a residual value—the estimated value of the car at the end of the lease term. A novated lease calculator can help you understand how the residual value impacts your overall payments. It’s a key factor to consider if you’re planning to purchase the car or sell that car at the end of the lease.
How to Use a Novated Lease Calculator in Australia?
Using a novated lease calculator is straightforward, and most calculators require you to input basic details about your lease. Here’s a step-by-step guide on how to use one:
- Choose the Vehicle: Start by inputting the car you’re interested in leasing. Have a play around and see how different vehicles stack up.
- Choose the Lease Term: Select the length of time you want to lease the car. Most leases are between two and five years, but you can adjust this based on your needs and preferences.
- Add your kms: Input how many kms you drive in a year; this will impact the price and it is best to get a rough figure that is close to what you actually drive in a year.
Why a Novated Lease Calculator Matters for Novated Leasing
If you’re considering a novated lease, using a novated lease calculator becomes even more important. A novated lease allows you to finance a car through your pre-tax salary, resulting in significant tax savings. A novated lease calculator can show you how much you can save in taxes and provide a clearer picture of the overall cost of leasing.
For many Australians, a novated lease is a smart way to reduce their taxable income while driving a new or near-new vehicle. Using a calculator helps you see the financial benefits of this arrangement and ensures you’re getting the best deal possible.
Conclusion: Save Time and Money with a Novated Lease Calculator
Leasing a car through a novated lease can be a cost-effective and flexible way to drive the vehicle you want without the commitment of buying it outright. Whether you’re considering a novated lease or comparing different vehicle options, a novated lease calculator in Australia is a valuable tool that helps you estimate your costs, compare different lease options, and make the best financial decision.
Ready to see how much you could save with a novated lease? Use our novated lease calculator today to get an estimate of your payments and start your journey towards driving the car you’ve always wanted.
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