Tuesday 25 November 2014

Doing a Novated Lease

Most business owners acquire vehicles for work-related purposes. On some occasions, however, at least one employee may need a vehicle for his/her duties and for use off-hours. Companies may provide senior personnel with a vehicle under the individual’s compensation package. This requires taking out one through a novated car leasing programme.

What are novated leases?
Novated auto leases are special financing arrangements between a lender, the employer, and the employee who gets the vehicle. The object is to help the employee, through his/her employer, find a vehicle that best suits his/her needs. The amount to be paid every month will be deducted from the employee’s salary, together with his/her other monthly contributions.
When the employee resigns
When an employee who took out a novated lease with the company decides to resign and transfer to another company, he/she has to negotiate with the new employer to take over the leasing responsibility or pending repayments. Releasing the vehicle would depend on the employer.

There’s nothing wrong with assigning a specific vehicle in the company fleet for a certain employee’s use, on novated lease. You owe it to your top employees to provide the assets needed for them to perform their duties better. 

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