Some options can be difficult to understand when it comes to financing your next car. So, at Corporate Car Brokers, we have broken down each option, making it easy to decide which finance option is best for you. Novated leases have become increasingly popular over the years as they combine many features of the more common finance options. A novated lease is beneficial for both employers and employees so is a great option for a corporate car purchase.
What is a novated lease?
Put simply, a novated lease is an agreement between three parties; the employer, the employee and the financer. In the case of a novated lease, the employer has the obligation to meet the required repayments over the lease period. Similar to a personal loan or other more common finance options, a novated lease is flexible, and repayments are based on the term, interest rate and amount borrowed. There are many benefits to a novated lease for both the employee and employer.
Benefits of a novated lease for the employer
The lease is included in the employee’s salary package, adding great value and increasing the employee’s retention in their role over time. Having the salary included in the employee’s salary also means there are tax savings for the employer.
Furthermore, the employer has the benefit of having a regular payment structure which usually includes ongoing repairs and maintenance. The management of the vehicle is not with the employer, taking the burden away from usual company cars that include a hiring process. Finally, if for any reason, the employee’s contract is terminated, a novated lease leaves the responsibility of the car to the employee, which reduces the overall liability of the employer.
Benefits of a novated lease for the employee
A novated lease is a great option for an employee as the car is included in their overall remuneration package, meaning, no repayments on their behalf while they are in the contract. You may be thinking that the novated lease means the employee has no input as to what car they receive, however, it actually provides a lot of flexibility in choice for the employee! If the employee’s contract is terminated, the employee has the option to own the vehicle and start a new agreement with the financer, providing further security for the employee in the future.
If you think a novated lease is a suitable option for you as an employer or employee, contact Corporate Car Brokers today on 1300 539 010 to find out more!