How Much Money Do I Have to Earn?
A lot of people shy away from the option of novated leasing believing that a high income is a requirement for taking on a novated lease. This isn’t the case. Novated leasing is an option for everyone, whether you are on a high income or not.
There are no requirements that say you need to earn over a particular amount to be eligible for a novated lease. Whilst this is the case, you might find that a novated lease isn’t actually going to be beneficial to you. It all comes down to your individual circumstances including how much you earn, the value of the car and how many kilometres you’ll be driving.
For example, say you are earning $40,000 and you want to organise a novated lease for a $15,000 car. You’ll be driving approximately 20,000 kilometres a year and you want a novated lease for a three year term paid monthly. Based on these figures, you’ll be paying around $130 per week and saving around $1700 per year.
Alternatively, say you earn $80,000 and you want to lease a car worth $30,000 on a two year novated lease. Say you’ll be driving 40,000 kilometres per year. Based on these figures you’ll be paying around $250 per week and could be saving almost $5,000 a year.
The best thing to do is to seek independent advice from a financier or accountant. They’ll be able to tell you whether or not you’ll benefit from a novated lease arrangement.
In the meantime, things you do need to be eligible for a novated lease include:
– You must not be on a probationary employment period. So if you’ve just started a new job and your contract stipulates that your employment will be reviewed after 3, 6 or however many months then you will not be entitled to take on a novated lease. Once this probationary period ends you’ll be in a position to revisit the idea of a novated lease.
– Your employer needs to be willing to enter the agreement as well. Not all employers will take on novated leases. Before you do all the research, find out whether your employer offers novated leasing arrangements. If your employer would like to find out more, direct them to this page here.
If you’re thinking about taking on a novated lease but you’re not sure whether it’s the right move for you based on your level of earnings, seek some advice from a finance professional. You don’t need to be on a high income to be eligible for a novated lease and you might still benefit from a novated lease on a low income, but it’s always best to make sure.