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What Are the Benefits and Drawbacks of Car Leasing?
After making an amendable arrangement with the company, the employee signs a contract for the lease of his chosen vehicle. In exchange for the vehicle, the employee will have to fulfill all his obligations to the company most especially the monthly payments he needs to make.
The employer, on the other hand, will ensure that payments are deducted from the employee's monthly pre-tax income. There are certain agreements that can be covered by the monthly payment but then they employee can make certain arrangements that will include maintenance costs. While this can be very advantageous to the employee, terms and conditions will still depend on contract laid by the leasing company.
Without a doubt, these car lease deals allow employees to drive their own car by only paying small monthly fees. In addition to the financial benefits, this type of agreement also gives the employees greater flexibility when it comes to choosing the car they wish to drive. Depending on the amount they are willing to spend every month, employees can pick the most luxurious car in the market.
In case he wants to own the car, he is given the option at the end of the leasing period to either purchase the vehicle for its residual value or get into another agreement so he could upgrade his car. Now if you want to ensure that the leasing period will cover the maintenance charges, you can go ahead and make an arrangement with the leasing company.
Truth is, car leasing is a great arrangement that can offer you numerous advantages. While its benefits can be a bit overwhelming, you must be very cautious with your decision as this type of deal has also its fair share of disadvantages. As long as you are completely aware of the drawbacks, there is nothing to worry in case you decide to take advantage of these car lease deals.
According to experts, tax benefits that this type of deal can offer you may not always be the best choice when it comes to making huge savings. Apparently, car lease is only a better option for those people who belong in the upper tax bracket. This simply means that tax benefit is felt at its most when the salary is higher. If you have a small salary, you won't be able to appreciate the advantages that this type of arrangement can offer you.
With that, it is important that you use an online novated calculator before making any final decision. This type of tool will allow you to obtain an estimate of how much you will be able to save in case you push through with the leasing arrangement. You should only agree on an arrangement that will maximize your financial standing.
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