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Novated Lease - Is It A Yes Or A No?

May 18th 2015 at 4:41 AM

Novated lease is the latest and most popular way for employees to get brand new car. This type of financing method is a very attractive way to create a positive employer-employee relationship. Several businesses have utilized this scheme to magnet several employees to work in their companies. Employers offer their employees a novated lease contract to provide them with company cars which they can drive for work or for personal use.

A novated car lease is the use of a motor vehicle for a fixed period of time at an agreed amount of money which is stipulated in the lease contract. This contract is a tripartite agreement in between the employee, employer, and the lease company. A novated car lease has been a very economical way for companies to provide vehicle to their companies.

Entering in a novated car lease is extremely cheaper than owning and maintain a fleet of company cars. However, in the part of the employee this can have advantages and disadvantages. Before deciding to enter into a lease agreement it is important for any employee to examine and weigh his personal circumstances, financial capability, and preference. If you are interested in entering in a novated lease contract with your recent employer, below are some of the advantages and disadvantages of a novated car lease:


• Easy qualifications and requirements.

• Leasing a car requires low down payment. There is no need to for a huge initial cash outlay.

• Lower monthly lease payments than car loans.

• You can have the pride of driving a brand new car with the latest and modern comfort and safety features.


• You do not have a property ownership title.

• There is no car at the end of the novated lease contract.

• Your car has a mileage allowance, if it exceeds certain charges will apply.

• You are not allowed to make any modifications with the car.

• Lease companies dictate the amount of wear and tear of the vehicle. At the end of the contract, each car will be assessed for wear tear if the extent of wear exceeds the considerable amount, you will have to pay for it.

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