What is the interest rate for a novated lease
We so often hear about people working out their novated lease interest rate as being 15% 20% (occasionally even 25%)
But usually those interest rates have been calculated on the wrong basis.
Novated leases are actually rentals not finance repayments, so using a typical loan calculator won't return the right numbers.
You will end up with an inflated interest rate.
The critical information to know is the 'Comparison rate'
Comparison rate is the real interest rate, including all fee, costs and inclusions.
The Comparison rate can still be impacted by other contributing factors like deferred payments, included warranties and included first insurance premiums etc
But it presents the real rate rather than just a base rate.
To compare numbers you still have to check that the novated lease numbers are the same.
Same term, residual, inclusions, FBT base value, deferred payments and the vehicle price even GST plays an impact.
Want to check the ATO Residual Guidelines too?