Why You Should Consider A Novated Lease – The Basics, The Why, The How
There are three legitimate ways to securing a car for personal use: to purchase with cash; to pay installments over time while retaining ownership through financing; and to remit monthly installments while being allowed to drive a car, without having direct ownership, and being required to return it at lease end.
Although many drivers like to own their cars to modify, sell, or trade as they please, leasing features many benefits over purchasing or financing: lessees aren’t responsible for repairs; they don’t have to regularly maintain their vehicles, as such an obligation is that of the lessor; and aren’t stuck with hefty purchase prices.
A novated lease is an improvement over basic leases in many ways. Most simply, a novated lease is one an employer takes responsibility for – although employees are still responsible for paying monthly installments – in turn providing tax benefits, among several others, to both parties involved. We’ll touch over the many benefits to all those involved towards the end of this article.
How can I go about maneuvering a novated lease?
An employer’s motivation for offering a novated lease is to build a stronger working relationship between involved employees and the companies they work for. You can see if your employer offers novated lease programs by asking your manager, or whoever’s responsible for employee compensation.
It could be possible your employer has a novated lease program available for employees, and them not being eligible for the program. You must always, in every circumstance, be signed up for a Stratton Finance novated lease Calculator benefit in order to receive assistance from your employer.
How does a novated lease work, particularly?
Once you’ve assured yourself that you’re eligible for a novated lease assistance program, go finance a vehicle – any vehicle, given it meets your employers’ contract terms. Ask the car yard to have it leased in your own name. Keep in mind that the lease is entirely yours at this point, and your employer is involved in no way.
Approach your employer to set a meeting between yourself, company representatives, and a financier that services payments. Your employer herein agrees to take over financing responsibilities, among other responsibilities you two will agree on, then deduct monthly payments from your pay until lease end.
The benefits of engaging in a novated lease
Employers typically gain stronger working relationships from offering novated leases to workers. Further, they usually don’t cost as much as other benefit packages.
For employees, monthly installments aren’t included in annual tax filings, effectively making your taxes cheaper at year end.
Your vehicle follows you wherever you go, even if you quit working for your current employer. While you’re immediately required to assume regular payments on the leased vehicle, you’ve of zero obligation to your potentially-former employer.
Novated leases don’t show up on company’s financial statements, taking hefty liabilities off their balance sheets.