Purchasing a new car is a dream come true. With your private vehicle, you will have the convenience of moving from one point to another at your own time and when you want to. Therefore, going to work. Taking your family out, visiting your family and friends, etc. will be easy. However, the hardest part is saving enough money to buy your dream car.
It will take you up to five years to save enough to own a new car. Most people more so those that are buying a car for the first time are not willing to wait for this long to have a car. For such people, it is essential to know the available options and make the right decision. We will take a close look at novated lease vs car loan calculator and advice on the best way forward.
What is a Car Loan?
A vehicle loan is a car fiancé option in which an individual borrows money to purchase a car. Typically, the borrower is bound by an agreement to pay back the full amount as well as the interest within an agreed period.
What is a Novated Lease?
Novated leasing is a cost-friendly approach to securing a car whereby your finance and running costs are GST free and collected wholly or in part from your salary, reducing taxable income and maximising take-home pay. Therefore, your weekly or monthly cash flow is not used to pay for insurance, registration, fuel, servicing, roadside assistance, tires, etc.
But which among the two is the ideal way to finance your new car? Well, both have both advantages and disadvantages. However, no matter which way you look at it, a car loan deal will never beat a novated lease deal. First, unlike when you go for a car loan, all maintenance and running costs of the car are covered under a novated lease deal. It means that there is no time your car will stall for lack of fuel, insurance, service, etc. Secondly, as mentioned above, with a novated lease deal, you will increase your take-home since the deductions are before tax.
Further, with a novated deal, you don’t have to deposit to own your dream car which is the opposite with car loans. With novated lease deal, you can choose to buy a new or old car, but with car loans, there are restrictions on which cars you can finance. At the end of the novated lease, you can choose whether to make an offer and buy the car or extend the deal which is a provision not available with car loans.