Most people are curious about novated leasing. They have probably heard the term from other people or media sources but aren’t aware what the deal is all about. Well here is the novated lease explained. It is simply a car leasing deal that involves the use of an employee’s pre-tax salary to acquire a new car. Many individuals say that this deal is tempting which is true. Just imagine driving a new vehicle without having to pay a massive amount of cash for down payment. Well, this offer is beneficial to not only the employers but also employees as well.

Most people consider novated leasing as a perfect way to obtain their dream car that they want to drive. Car lease deals allow any employee to drive their dream car without necessarily breaking their bank. Now, if you do not understand the amount of money you will save with such a deal, you need to go online and use a novated lease calculator. By using this tool, you can check by yourself how much money you will need for you to take home a new car. Also, there are leasing companies who offer assistance to help you understand the terms and saving involved in such a deal.

How can a novated lease deal help you get your dream car? In obtaining the car of your choice, you must first look for a company that offers financing assistance. This company will purchase the vehicle from the dealership. For you to take the home the car of your choice, you will need to make monthly payments to this company through your employer. This deal is three-way in that it involves you, your employer, and the financing company. From your pretax salary, your employer will deduct a fixed monthly rate that they will send to the financing company.

Usually, this deal has a maximum of 5 years leasing period. Every time your employer takes the monthly rate from your pre-tax salary, the outstanding balance on the car gets reduced. During the last payment, the individual who entered into the deal has the option to own the vehicle for its residual value.

You should note that the employee doesn’t own the car during the leasing period. In essence, these car lease agreements only allow people to drive a new vehicle without having to pay much up front. Think of it as a tenant paying his monthly rent to his landlord. While this may sound too good to be true for some employees, this type of agreement is beneficial to both employees and the employer. It is a good deal.