What Are The Benefits Opting for A Novated Lease?

This is a common practice in Australia, which allows a company to lease a car on behalf of an employee. The car would be with the employee, and he/ she would be making monthly or annual payment from their pre-tax income until the agreement is exhausted.

Car lease experts

Novated lease means the same thing with car lease. The term ‘car lease’ is used in Australia and its environs. Whenever we use the term novated, it implies that the car has been transferred between two parties. A good novated leasing company will be able to explain this to you in more detail.

Novated lease-three way contractual agreement

In Australia, novated lease is seen as a three way agreement between three parties namely:

  • The lease company
  • An employer, and
  • Employee

If these three people are not in agreement, then proper agreement is not said to have taken place. During the period of the lease, the employer would take the responsibility of the employee’s obligation under the lease. They would be making the lease payments on behalf of their staff, and would be deducting same from their pre-tax income.

At the expiration of the lease agreement or if the employee ceases to be employed by the employer, they would retain the car with all its rights and privileges.

Benefits for the employee

  • Buy or lease a car?They would be making the payment gradually from their pre-income tax
  • They would gain multiple discounts if the company has so many cars under this scheme
  • It is highly flexible- the employee is most time given the opportunity to select the car he / she wants
  • The employee keeps the vehicle till the novated lease expires and they can also transfer it to a new employer.

Benefits for the employer

  • They can promote the employee while at the same time be deducting some money from his/ her pre-income tax without hampering the smooth running of the business.
  • This is another way of operating a fleet of cars by the company
  • They are not solely the company’s cars, so they are off balance sheet.

Benefits for the novated lease companies

They are responsible for providing different services for:

  • Commission and / or
  • Fees

On a daily basis, a number of novated lease companies appear in Australia, United Kingdom and around the world. But novated lease services seem to be well established in the United States. To find out more make sure you speak to these car lease experts and they will help you understand your leasing options better.