How does my Novated Lease budgeting work?
At Maxxia we get a lot of questions from customers about the money that we collect from payroll for their novated lease each pay. Generally, people understand that this amount covers their lease payment, administration fee and the running costs associated with their vehicle, but there can be confusion over how we calculate the amounts.
Let’s take a look at all these questions, using a new car from a dealership as an example (so it has new rego etc.).
When you first set up your novated lease with Maxxia you get a nice new car, new registration, new insurance, new tyres, new everything! This means we have a clear picture of when you will need to pay these costs again. Tyres are a little different, but the other items are essentially annual expenses.
So, if your annual registration is $800, we know that in a year’s time we will need $800 of your before-tax money to cover this. If you get paid fortnightly, we make collecting this amount easier by spreading the $800 evenly over the available pay cycles, which over the course of a year will be 26.
$800 divided by 26 is $30.77. So from your first pay with Maxxia you will contribute $30.77 each pay for registration.
The above example is exactly the same for all your expenses.
You take the amount you need and the due date of the expense and divide by the amount of pays you have between now and then. It doesn’t matter how you get paid — weekly, monthly or fortnightly.
Something to be aware of is that for items like fuel and tyres, we are estimating how much you will use, and when you will need new ones. We can’t be sure how much fuel you will use or how much driving you will do, so we do our best to collect the right amount, but it’s not an exact science.
Hopefully this has cleared up some of the confusion around how we organise your novated lease budgets. The most important thing to know is that it can be more flexible than you think and if you want to discuss your novated lease budget, don’t hesitate to give us a call or get in touch online.
This website contains general information and doesn't take your personal circumstances into account. Seek professional independent advice before making a decision.