Purpose: A novated lease is used for employees who have the option of
receiving a car as part of their salary package. The employer pays all rental
payments to the financier on the employee’s behalf and the employee enjoys full
use of the motor vehicle.
Term: The term of finance agreement can be from 1 - 5 years.
Novation: The employee then novates the lease to the employer, who assumes all the employee's rights and obligations under the lease, including responsibility of meeting the lease repayments, normally deducted as part of the employee's salary package.
Deposits: Deposits are not required. The full purchase price must be
Ownership: The contract is in the name of the employee who remains the registered owner throughout the lease and keeps effective control of the vehicle at all times. If the employee leaves the company, the vehicle remains with the employee. In the situation generally the employee takes over the payments or gets another employer to make the payments.
Residual/Balloon: You must have a residual payment as the last
payment of your finance agreement according to ATO Guidelines. This usually
varies between 37% to 75% of the cost price of the vehicle. This amount usually
represents the approximate value of the goods at the end of the lease. A
residual payment allows for lower monthly payments and leaves you with more
working capital to run your business. You may refinance this residual value at
the end of the contract (depending on the finance company).
The Car loan market is very
competitive. If you have any questions that we can help you with, please call
at any time on 1300 79 63 69 or click on the Make an Obligation Free Enquiry link
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