What is novated leasing?
Novated leasing is probably the most interesting option for buying a car when it comes to businesses in Australia, It is a way for both the business to contribute to the vehicle as well as for the employee to gain his own car after the leasing is over.
- The financial institution providing the lease,
- The employer and the employee taking the lease.
- The employee signs a lease agreement with the finance company, The business for which the employee works takes over all the financial obligations of the lease for the employee. For that, a new agreement has to be signed that is called a “novated agreement”, between the employee and the employer.
- The installments are paid out of the employee’s pre-tax income
- If the employee leases a car by themselves they can, the costs may be a bit higher.
- The company only takes on themselves the financial part of the leasing obligations.
- There is no risk if the employee leaves the firm.
- The financial leasing obligations are only transferred to the company for as long as the employee is current with the company.
- If the employee leaves the company, the novating agreement ceases.
- The obligation of the now former employee to pay the installments.