Something that’s really catching on in Australia is buying a car using a novated lease agreement. If you’re not familiar with this type of arrangement, it’s one among an individual, the individual’s employer and a car finance company. It’s usually advantageous to all parties.
The way a novated lease works is by letting a company provide a vehicle for one of their employees. This ties in the lease payments to the employee’s total pay package. It also lets the company complete their fleet requirements while offering more incentives and flexibility to their staff.
Benefits of a Novated Lease Agreement
When an employee leases a vehicle, their employer can be asked to make monthly payments for them from their pre-tax pay package. Using pre-tax wages legitimately decreases an employee’s taxable pay which leads to a noticeable savings on income tax. However, the employee always retains ownership of the vehicle. This means that if the employee changes jobs, the vehicle goes with him or her and the novated lease is given over to the new employer.
Another benefit for the employer is that the vehicle isn’t considered an asset or a liability. So it’s not listed on the company’s balance sheet. In addition, the company doesn’t have to maintain the car since it leaves with the employee.
A novated lease agreement also provides financial incentives if an employee wants to buy a car. The employee can lease the car and request that their employer make the monthly payments from their pre-tax wages. This works out for all parties concerned.
Novated lease agreements are typically viewed by finance companies as a good thing because there are fewer risks involved with lease payments made by a company or corporation than with an individual. This means that the finance company is more assured of receiving the proper payments on time. Anytime a finance company can feel confident in receiving their payments in a timely manner, they’re much more willing to finance the operation.
If you feel that a novated lease agreement is something that may work for you, click here to get more information. In addition, you might want to check out the
1alp website in case they can provide the exact type of novated lease agreement that you need. It just may be the best way for you to get that vehicle that you need so badly in a way that you can afford.
