If you want to get a car loan while working at a reputable organization, you must be thinking to choose between one of the two lease options known as novated lease and personal lease.
The personal lease is normally available for everyone no matter whether they are working at an organization, are self-employed or running a business. But the novated lease is only available for individuals who have a secure job at a reputable organization.
If you’re thinking of choosing between these two methods, this article is going to help you out. We’ve collected some information you might need to make an informed decision. So, without any further ado, let’s take a look at what’s the difference between getting a novated lease and a personal lease.
Things you should know about Novated Lease
Novated Lease enables you to take a car loan with the help of your organization. Your employer is considered responsible for making the payments. However, you need to convince your boss to approve your application otherwise, you won’t be able to apply for the loan.
Once your loan is approved, your employer will start deducting the monthly installments from your total income. The reason why many people consider taking a Novated lease is that they are free from paying the taxes for the amount that goes for installments.
The novated lease is basically divided into two categories. In the first category, the employer takes care of all the costs associated with maintenance. But if you’ve chosen the non-maintenance category, you’d have to manage the maintenance costs on your own and the employer will only pay the monthly installments along with the interest rates.
The problem with the novated lease is that it doesn’t provide you with full control of the vehicle. The employer can take your vehicle from you if you left the job after a few months. Similarly, you won’t get control of the vehicle at the end of the installment period unless you make the residual payment.
Personal Lease is a better option if you want to get complete control of your vehicle. The interest rates for personal lease are significantly lower than the novated lease. Similarly, you won’t have to worry about administration fees when choosing a personal lease for car financing. The best part is that you aren’t supposed to pay the residual amount to take control of your vehicle. However, you’d have to pay the taxes because the amount won’t be deducted from your salary.