What is a Novated Car Lease?
A novated car lease is an agreement wherein an employee may finance the purchase of a car using their pre-tax income. The process involves said employee, as well as their employer and a financier. The employee will purchase a vehicle from the financier and then enter an agreement with their employer and sacrifice part of their salary to make the lease payments.
The lease term is usually 1 to 5 years in length depending on the agreement which you have made with your employer, with each payment (which may occur on a weekly, fortnightly, or monthly basis) reducing the balance on the lease. These scheduled payments are then subtracted from your pre-tax salary, which results in highly desirable tax benefits compared to having financed the car by yourself.
For further information on the tax implications of novated Lease visit the Australian Tax Office: novated lease.
For help planning novated lease, you can use our Novated Lease Calculator, right here on our website.
Novated Car Lease Benefits
- You have the use of the vehicle without having to budget for the repayments.
- You can purchase the vehicle without deposit or the hassle of being reimbursed from your employer.
- The novated lease agreement is set up so that in the event the employee leaves the company, the company is not left with the burden of a car which is of no use.
- There are numerous tax benefits to the employer.
Novated Car Lease Interest Rates
Natloans provides fixed interest rates for novated leases. This means that for the full loan term your interest rate will not change, making budgeting and planning with resects to it very easy.
Novated Car Lease Fees and Charges
- In order to establish the novated lease an you will need to pay a novated lease establishment fee. The fee includes GST.
- There is a cash booklet fee which is apart of the novated lease agreement that needs to be paid This fee also includes GST.
- The monthly novated lease payments will include GST, but these are tax-deductible.
- Please note the fees for a novated lease can’t be included in the finance. They need to be paid when the finance documents are signed.