Novated leasing is a common lease type for motor vehicles in Melbourne and all parts of Australia. Though it is gaining popularity in the UK as of late, it is not as widespread as it is in Australia and even the USA for that matter. With the help of this, the business can lease motor vehicles for the employee. However, the responsibility of the lease lies with the employees. The payments are taken from the pretax income of the employees.

Novated leasing has various benefits for both the employees and the employers.

For the employees:

  • They are able to choose whichever vehicle they want. If they change jobs, they are still able to retain the vehicle. The transference can be done to the new employer.
  • The vehicle can be as per the requirement of the employee. It does not need to be as per the designation or as per the salary. The vehicle chosen can either be a new one or a used one. However, the employee must make sure that it cannot be more than ten years old when the lease expires.
  • The employee can even use it for the purchase of a luxury vehicle.
  • The take-home pay is increased as these lease payments, and running costs are paid for with money before taxation.
  • The vehicle can be used for personal or official use
  • The employee does not need to pay GST, so he or she gets an extra 10%
  • The car can be had the same day, so it is very convenient
  • There is no lock-in period, and the employee can upgrade to something new at any time
  • Multiple vehicles can be leased if the employer consents to it
  • There is no stress as these payments cover everything.
  • If there are many vehicles that the employer has under this scheme, the employee is likely to gain due to volume discounts

For the employers:

  • This helps them to retain employees and thereby decrease their training and learning curve costs
  • It helps to increase levels of employee satisfaction
  • It helps them to be an employer of choice as this decreases the payroll tax as well as the work covered insurance. This is due to the fact that these are calculated on the basis of the employee’s gross wages.
  • The employer can show an increase in the salaries of the employees without incurring much cost to the business
  • It is more effective than operating various company vehicles
  • The business does not assume any risk regarding the vehicles. This would not be the case, however if these were company cars.
  • These vehicles are off the balance sheet

In a novated lease, there is a three-way agreement which is signed. It is between the employee, the employer as well as the finance company. For information on bad credit vehicle loans, click here. When the employee leaves the service of the employer and joins a different employer, the lease is transferred from the old employer to the new one.

For the service providers:

These leases help service providers as they are able to earn due to the various fees and commissions which are offered in exchange for the services rendered by them. If you’re interested in car rentals and finance, visit for more information.

Therefore, these leases are a win-win situation for all concerned.