About Novated Leasing
This form of car finance deserves special mention because of its uniqueness. It is unlike the traditional forms of car finance that only involves two parties. We can help you get novated leasing as we have lenders who offer this form of financing. What makes novated leasing quite special is the extent of its coverage. It is not limited to the cost of the lease but other costs that a car owner will normally incur.
It is a salary packaging arrangement that involves three parties instead of the regular two of the lender and the borrower. In a novated leasing, the finance company, the person seeking the finance, and their employer are involved. Through novated leasing, the person seeking finance does not just have access to car finance, but they can also include the car’s running costs, such as the cost of fuel, insurance, servicing, etc., into one package that you can make payments for. A novated lease is very beneficial as it allows you to get the car you want and cover all the costs associated; it is available for all kinds of cars, whether new, used, or an existing car.
Under the novated leasing agreement, the employer will be responsible for all or all the obligations in the agreement. When you use this arrangement, the employer bears the burden of paying for the lease and other obligations in line with the agreement, while the employee will use the car in accordance with the terms of the agreement. In exchange for these payments, the employer will reduce the salary of the employee proportionate to the total cost of the loan. Such a reduction in salary will generally mean less income tax which is expected to benefit the employee financially.
Although the obligations in the agreement are transferred to the employer, you, as the person as the employee and the person benefiting from the finance deal, still have the ultimate responsibility. Thus, if the employer fails to make any payment on the lease, you are expected to make the payments. The same goes for when you take an unpaid vacation.
The validity of a novation deed sustains as long as the person remains employed to the employer, and should the person cease to be employed, the agreement is immediately cancelled, and the obligations that the employer has agreed to bear under the agreement becomes that of the employer again. In this case, a new agreement can be entered into in which a new employer takes up the obligation. The obligations end when the lease expires.