A Novated Lease may be the ideal arrangement where you have an option as an employee of having a car as part of your salary package.
A Novated Lease is an agreement between you (as you are leasing the vehicle in your name), your employer and the financier. The advantage is that you finance the vehicle and its operating costs with a combination of before and after-tax salary.
Whilst you are employed the obligation for the payment of lease payments is transferred (Novated) from you to your employer for the term of the agreement. Your employer makes the necessary deductions from you gross pay and pays the lease payments directly to the Financier.
Frequently asked questions:
Can all employees take out a Novated Lease? Generally yes, but you need to check with your employer that they offer this benefit.
Will a Novated Lease reduce my net salary? It will. As your employer makes the payments this amount is taken from your pre-tax income. The advantage with this is that this method will reduce your overall taxable income – We recommend you speak with your tax adviser or accountant to confirm this.
Do I own the vehicle at the end of the lease period? – With a Novated Lease you agree to pay a ‘residual’ which is the amount that remains owing on the vehicle at the end of the lease – then you will own the vehicle outright. Alternatively subject to approval you can extend the lease for a further period or sell the car and use the funds to pay out the residual.
What happens if you leave your employment? – You assume sole responsibility of the lease should they change jobs for any reason. You Employer will cease making the repayments and you must then make the repayments.
Please go to our Contact Us page and get in touch with a Business Finance and Leasing Broker to discuss how we can tailor the ideal Novated Lease finance package.