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What is a Novated Lease?
A novated lease is a lease that allows a business to lease a vehicle for an employee, but ensure that the funds for the lease come out of the employee’s pre-tax income. In most cases this lease is an agreement between the leasing company, the employee, and the employer. If the employee’s term with the employer ends, the vehicle remains in the employee’s possession, but anything that the employer dedicated to the agreement, including financial obligations, revert to the employee.

There are a number of benefits to using a novated lease for the employee. The largest of these is the great savings that an employee can make on income taxes when leasing an employee in this way. This is because the money that is put towards the vehicle in the lease is not taxed. Furthermore, if these leases are generated in large volumes in a company there is the potential for volume savings and an employee can choose his or her own car, rather than being tied down to a company car. Finally, as the employee is dedicating money to the vehicle and is named on the novated lease, such a vehicle can be used for both personal and business purposes.

There are also a number of benefits to the employer in using a novated lease. Perhaps the largest of these is the fact that the employee receives a substantial increase in his or her salary through the decrease in taxes, but the company does not have increased expenses. Also, the company is able to give out “company cars” and regulate them as such, but has no responsibility for the vehicles. Also, the cars on not on the employer’s balance sheet so no tax needs to be paid them.

For those who wish to implement a novated lease, there are three choices of implementation. One can implement a novated finance lease, a fully maintained novated lease, and a fully maintained novated operating lease. In the first only the vehicle is leased. In the second the vehicle and all operating costs are leased, allowing the company to share the cost of maintaining the vehicle. In the third the company shares the decrease in residual value. They each have their own benefits but overall, a novated lease is a great choice for a company.

It’s important to compare car finance rates and companies. Buying a car, whether new or used is generally one of the largest purchases you make and if you don’t get the best car finance rate then it could be even bigger than first thought.

Car Finance Brokers generally have a margin of around 4% to play with and generally they only need to tell you the base rate as this is what they legally have to tell you, not the actual rate you are paying. It’s always a must to jump online and use a car payment calculator to work out the rate you will be paying on your car loan.

There are some other types of car finance and car loan products which may be of more benefit to you and can literally save you thousands of dollars in payments. A Novated Lease is a form of Salary Packaging which will save you money on your next vehicle car finance rates.

If you are unsure on whether you are getting the best deal, give our team a quick call or make an enquiry (see the contact us page) and we will tell you very quickly whether the deal you are being offered is the best available or not.

However, most people get very emotional when purchasing a car and when a car dealer says you can drive it away today you will most likely end up paying more money in car loans interest than is needed.

Another type of car finance is a Chattel Mortgage, it works slightly different. It’s best to speak direct to our team re Chattel Mortgages.

Speak to our team, we only charge an admin fee of $400 which is much less than you will pay in interest! You will generally pay in excess of $3,000 in interest.

Get a better deal through credit card comparison. Why not look at saving money with Balance transfer credit cards. Stop giving banks money, get a no annual fee credit card.

Other sites which may be of interest to you include these Australian favourites:
• Car Lease
• Car Finance