Often the first time people hear the word ‘novated lease’ is when they are considering one – perhaps introduced to the option by a colleague or employer. However, compared to a straightforward lease, a novated lease is a little more complex and the concept of the ‘novation agreement’ is not always clear. In fact, at FinCar one of the most common question we get asked is ‘What is a novated lease?”. In simple terms a novated lease is a three-way agreement between an employee, their employer and a novated lease company. How it works is that the car repayments and running costs are paid before tax. However the driver of the vehicle will be charges fringe benefits tax (FBT) depending on the amount of kilometres driven each year. Perhaps the best way to describe what a novated lease is, and how it actually works is visually. That’s why we’ve put together this 50 second video which explains in brief how a Novated Lease works. So, to find out what is Novated Lease, simply click the play button below.
So, now you know what a novated lease is! But don’t stop there – if you liked this video, check out our other videos relating to novated leases including:
Novated Leasing – an overview
Or, simple give us a call on 1300 346 227 and ask to speak with one of our friendly novated leasing consultants.