What is a novated lease?
A Novated Lease is a 3-way arrangement between the employee, the employer and the financier where the obligations under the finance lease are transferred from the employee to the employer through a Deed of Novation, and the employer assumes responsibility for making the lease payments to the financier. The Deed of Novation remains in force until the earlier of the end of the lease term, or until the employee ceases employment.
A Novated Lease is a three way agreement between the employee, the employer and the financier. In simple terms a Novated Lease is a finance lease between an individual and a finance company combined with a Novation agreement which means your employer is responsible for the lease obligations whilst you are in their employ. The novation ceases when employment is terminated and the Finance Lease between you and the Financier remains in place.
A novated Lease is an agreement between your employer, yourself (the employee) and the financier, where the obligation to meet the repayments under the finance leases is with the employer. With a novated lease agreement, you have the right to take the motor vehicle with you should you change jobs and, structured correctly, there may be tax advantages with your remuneration package. As with other leasing structures, repayments with a novated lease are flexible and amounts depend on the term, interest rate, amount borrowed and the residual payment.
