Common Misconceptions About Novated Leasing Busted!
In this article let us answer some of the misconceptions of getting a car novated. Here are the top three questions that are often associated with novated leasing.
Will my boss say yes when I ask if I could get a novated lease through our company?
With all the tax incentives that the company gets, how can he not? You see, a novated lease is a 3-way contract between you, your employer and the service provider or finance company. All three must be amenable. What is of most importance is working with a reputable car financing company like Vehicle Solutions. They make it pretty straightforward for the employer’s side of the set-up. With everything lined up paperwork-wise, your boss can only agree. Besides, the company stands to get some substantial tax benefits from the novated lease as well. Not just that, but they also gain or retain an employee who is happy because he’s saving money. It is almost like giving a salary increase except that it doesn’t affect the company’s operational expenses – what more can your boss ask?
If I lose my job, is my novated lease portable?
When you leave or terminate your employment, for any reason, even though your employer makes the payments on your novated car, they take the money from your salary; thus without a salary, it becomes your obligation. However, you can take out additional insurance to protect yourself in the event of unemployment. You can also easily move the lease to a new employer, so the key is correct structuring of the contract and this may not affect you at all.
How can I deal with the residual value at the end of my lease?
By law, when the lease ends, it carries with it a residual or in some terms a balloon payment to pay out and settle the contract. This amount is figured out as a percentage of the vehicle’s capital value. An assessment regarding market value can be done using factors like the make and model, the condition of the car and the odometer reading. Since the car is your responsibility, if there is a shortfall between the residual and the current market value, this is something that you would have to assume. However, should the market value turn out to be in your favour, you get to pocket that difference, and it will be tax-free! So this is one that could work in your favour as well! Just be fully aware of this before entering into the novated lease – consider perhaps picking out a car that has a history of retaining its value.
For more information, check with the experts at Vehicle Solutions. Our team will help pave the way to you getting a new car through novated leasing.