What Exactly Is a Novated Lease?
If you haven’t purchased a vehicle in a while, it’s likely you’re wondering what a novated lease is. This is a special type of financing that is an agreement between your employer, the finance company, and you. This is commonly called car salary packaging or salary sacrifice.
Novated leases are setup so that your employer pays the car finance company your vehicle payment each month. The money your employer uses to pay the finance company comes out of your pre-tax salary rate. This means that you actually end up paying less money in taxes because your taxes are figured after the car payment is made to the finance company. Many employers are starting to offer Novated Lease at Stratton Finance as part of their benefits package.
In addition to being able to have more disposable income, you are able to have more options when it comes to picking out your ideal vehicle. With novated leases, companies don’t have to worry about setting up deals with certain vehicle manufacturers. This allows employees to decide on the car options that best fit their lifestyle and budget.
What Happens If I Change Employers?
Many individuals thinking of getting a novated lease are unsure of what happens if they were to leave their current company. Most believe that they must stick with the same employer until their lease is up. This is simply not true. Your current employer can transfer the lease to your new employer or to your own account.
How Long Do Novated Leases Last For?
The average novated lease lasts between one and five years. This can change depending on the dealership, employer, you, or other similar factors. Keep in mind that this type of vehicle financing is just like leasing the vehicle yourself. You can pick the terms you wish to use to get your vehicle financed.
Can I Lease A Used Vehicle?
In most cases, you can use a novated lease for a used vehicle. Employers may specify certain age requirements for the vehicle you intend to lease. For example, the vehicle may not be more than three years old at the time the lease agreement starts.
How Does Car Insurance Work With This Type Of Lease?
Car insurance works the same for this type of lease compared to regular vehicle financing. You will need to contact your car insurance provider or find a new one to insure the vehicle you are leasing. Your employer may be able to offer you insurance deals with specific companies they work with. Who you decide to go with for your insurance provider is completely up to you.
What Are My Options When The Lease Expires?
At the end of the leasing period, you have a couple of options. These are:
- Purchase The Vehicle By Paying Off The Residual Value
- Extend The Lease And Refinance For the Car’s Current Value
- Trade The Vehicle In And Start A New Lease With Another Vehicle