Comparison rate 5.82%*
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A Novated Car Lease is a popular type of vehicle lease for employers and employees. It provides an alternative to the standard company car. It allows the employee to take on the responsibility and control of the lease and associated benefits. The monthly rental payments are made by the employer out of pre-tax salary. This enables an employee to select a vehicle that suits their lifestyle.
A Novated Lease is a three-way agreement between: the employer, the employee and the lease/finance company. Novated leases operate in a similar way to a conventional lease. The difference being that the employer takes on the payment obligations on the employee’s behalf.
The employer takes the rental payments from the employee’s pre-tax income. This is a form of salary packaging. Because payments come out of pre-tax income, novated leases often represent tax implications including FBT (Fringe Benefit Tax). We recommend that taxation advice be sort from an accountant before any purchase decisions are made.
At the end of the lease agreement the vehicle remains in the control of the employee but all the obligations previously assumed by the employer now revert to the employee. This also occurs if the employee changes jobs.
As with other car leases at the end of the loan term a residual value remains. In most instances the employee has two options. They can buy the car outright at a predetermined value. Or they can pay off the residual value and walk away.
If an employee changes jobs, they can simply arrange to have their new employer take over the novated lease from the former employer. The employee also has the option of refinancing the residual amount for an additional term.
There are two main types of Novated Leases:
1. Fully Maintained Novated Lease.
2. Non Maintained Novated Lease.
Call one of our Experienced Finance Experts today to discuss your Novated Car Lease on (07) 5493 1222.
Or make a Quick Loan Enquiry now. One of our friendly Novated Car Lease specialists will call you at a time convenient to you.
The Australian Taxation Office has information on tax implications of a novated car lease including FBT.
*The Comparison Rate is calculated on a Secured Loan of $30,000 fixed for a term of 5 years, effective 12/06/2015 and subject to change. WARNING: The Comparison Rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts may result in a different comparison rate.