Novated Lease Basics Explained
In terms of what the average Australian household makes in a year’s time, Australia’s inhabitants are far more indebted to lenders than residents in any other country on planet Earth.
As such, most Australians can’t reasonably afford to purchase vehicles in cash, or even finance them. Rather, the most economic alternative is leasing such vehicles. Without leases, Australians would be in more debt than they already are.
What Is A Novated Lease?
Leasing a vehicle is a way of securing a vehicle for personal use. In order to lease, individuals typically must have positive financial histories, which proves difficult for some Australians.
Employers almost always provide benefit packages to their employees as a form of compensation. One of these benefits is a novated lease.
Using businesses’ own positive financial situations, they’re able to secure vehicles for their employees. Workers pay for their new or used cars’ novated lease from their pre-tax salaries.
By trusting an employer to provide a novated lease, everything from fuel to maintenance and back to roadside assistance is loads cheaper than if individuals attempted to find such deals without help from their employers.
Why Do Employers Offer The Benefit Of A Novated Lease?
Not everyone – in fact, few people – are in good enough financial positions to purchase, finance, or lease vehicles on their own. When employers offer the benefit of a novated lease, employees typically feel closer to their employers, which results in longer tenures and lowered costs of hiring new employees.
Businesses often have far more money than the average Australian. As such, they can easily afford securing vehicles for their employees – the vast majority of Australians don’t have this kind of money, and act loyal to their employers in return for a novated lease.
What Happens If Employees Take Up New Jobs?
The only thing employees have to do when they switch places of work is fill out another Novated Lease at Stratton Finance agreement with their new employers and their financiers – that’s it!
People interested in a novated lease should keep in mind that not all employed offer it as a benefit, though most competitive places of work do, in fact, offer servicing of their novated lease plans.
Are There Any Benefits Of A Novated Lease Not Covered Yet?
The central benefit of a novated lease is related to filing taxes at the end of the fiscal year.
All payments made towards cars secured by a novated lease are deducted from employees’ salaries, making the total amount of income taxes are due on significantly less than if employees found such leases outside of the umbrella their employers offer.
How Long Does A Novated Lease Last?
Most employers offer novated leases anywhere between one and five years in length. Employees are able to pick how long they wish to lease for, and can even pick new cars, as long as they’re pre-approved by their employers, once their existing leases reach the end of their term agreements.