novated lease

novated lease

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Novated Lease

Disclaimer

A Novated Lease allows you to choose a vehicle and package all running costs [link to GST and Car Running Costs] as part of your salary package.

As an employee of a company, you enter into a Lease Contract with nlc. You and your employer then enter into a Novated Lease Agreement with nlc. Your employer is then responsible for your obligations under the lease contract, which effectively means meeting your monthly payments.

The term "novation" simply means substituting an existing obligation (the agreement formed between you and nlc) for a new one (the agreement subsequently formed between your employer on your behalf, and nlc).

If you leave your employer, the novation agreement ceases and the obligations created under the lease agreement become yours.

Provided you stay with your employer, the Novated Lease remains in place until the expiry of the lease agreement. At this time, a residual amount will be due. This was set at the time you entered into the lease agreement and is payable by you. You have the option of refinancing the residual amount at this time also.

 

A Novated Lease is best suited for people who:

• Are an employee on either a salary or a wage
• Own a car or who want to own a car
• Have to borrow money, in order to be able to buy a car
• Use the car predominantly for private use*

* Note that driving to and from work is usually considered private use.

Key Benefits of a Novated Lease

• You don't need to spend any capital upfront or make a deposit
• You select the car you like, including accessories, trim and colour
• You may also select where you buy it from, although nlc can assist you with this, if you require
• All of your running costs are incorporated into the annual salary sacrifice (fuel, repairs, maintenance, registration, tyres, insurance)
• You have the use of the vehicle without having to budget for the repayments
• If you change companies, the vehicle remains yours
• You have control over what you purchase including accessories, colour etc

Interest rates

• The interest rate is fixed until the end of the term of the Novated Lease.

Fees and charges

• Administration and Management fees apply for all leases entered into
• These are clearly outlined on quotes by nlc and form part of the periodic repayments

Types of cars

Any car with genuine market value of $10,000 or greater that fits the Australian Taxation Office (ATO) definition of a car. The ATO defines a car as:

• A passenger-carrying vehicle with a carrying capacity of fewer than nine people; or
• A goods-carrying vehicle with a carrying capacity of less then one tonne.
• Motor cycles are excluded.

The End of the Lease

When you enter into a lease, the car has an agreed value. At the end of the lease the car will not be worth as much as it was when it was first leased. The Australian Taxation Office sets guidelines for the value of a car after a given term.

The minimum residual value [link to GST and the Residual Value] guidelines are as follows:

Lease Term (Years)	Residual Value Range (% of car price)
1	65%
2	55%
3	45%
4	35%
5	25%

At the end of the lease contract you can make an offer to purchase the car for the residual value. Leasing the car and making an offer to purchase the car are two separate transactions. While you do not pay GST when you first take out the lease, you are liable to pay GST on the residual value.

More Information

If you would like further information on our services please contact us on:

Telephone

03 8699 7000

Freecall

1800 643 044

Email

info@nlc.com.au