A novated lease agreement is an agreement between the financier (lessor) and you (the lessee), and your employer. In other words, a novated lease is a form of salary sacrificing a car, and their employer agrees to pay the monthly lease on the car from the employee’s pre-tax income. This is possible if your employer is happy to have a motor vehicle as part of your package. The financier owns the vehicle while you enjoy the full benefits of your motor vehicle in return for regular repayments which your employer is responsible for.
If you leave your current employment, you become fully responsible for the repayment of the motor vehicle. Your next employer may choose to novate the motor vehicle for you.
- The full price of the motor vehicle must be financed, therefore no deposit required, preserve your cash flow.
- A residual is required, meaning lower repayments (please note residuals must be within the Australian Tax Office guidelines)
- The interest rate is fixed for the term of the loan which means your repayments don’t alter.
- Once the agreement is finished you have the option of handing back the motor vehicle to the financier or pay out the residual if invited by the financier to take full ownership of the asset (Any shortfall the financier suffers in selling the motor vehicle becomes your liability).
- No residual risk for Employers
- Employers aren’t left with vehicles if the employee leaves
- Employers can offer an attractive salary package by including a novated lease.
- You can finance the asset from 1 year to 5 years.
- Finance amounts start from $10,000 and upwards
- Choose your own repayment frequency: Monthly, quarterly, semi-annually, annually, or irregular
- And make your repayments via D-debit, BPAY, coupon book and periodically.