Using a novated lease as a means to finance a new or used car has become increasingly popular in recent years according to industry expert, Advance Car Loans Pty Ltd.
As a car buying service, Advance Car Loans is well positioned to monitor the trends in car buying and novated leased certainly seem to be on the increase.
A novated lease is a three way agreement between the finance company, the employer and employee, as long as the employee works for the employer, the employer makes the payments of the novated lease to the finance company on the employee's behalf. Hence, the employer can take this from the employee's pre-tax salary giving them a tax benefit.
With a novated lease, should the employee cease employment, the liability to meet the repayments would pass to the individual.
A novated lease agreement can create a win-win situation for both employer and employee.