Novated leasing is a popular inclusion to enhance your employee benefits program for prospective and existing staff. It allows an employee to salary sacrifice the cost of a new (or used) car and it’s running costs, potentially saving them thousands of dollars.
Although many Australian employers are currently offering this service, there remains a lot of myths and misconceptions that are preventing some employers from jumping onboard.
We dispel some of the most common myths associated with novated leasing and explore the reasons why offering novated leasing is beneficial to both your business, and your employees.
1. I don’t see any real benefits for my employees in novated leasing
Novated leasing is not only good for employees – it’s good for business. Your employees will have the opportunity to drive their dream car, and access benefits only novated leasing can offer.
Employee benefits include:
- Tax savings by paying for a new car and related expenses from pre-tax income.
- Access to fleet discount pricing on the vehicle cost and ongoing expenses.
- GST savings on the purchase price, and ongoing expenses like fuel and servicing.
- Ability to smooth budgets with vehicle finance and running costs taken care of with regular payments.
Employers can also benefit by providing novated leasing as part of their offering. It’s a great way to help attract, retain and reward quality talent. Plus, you may be able to reduce your payroll tax and worker compensation costs.
2. I don’t want the company to have any liabilities
As the responsibility for the novated lease rests with the employee and not the employer, there is no financial risk to your business. If a staff member ends their employment with you, the obligations of the lease leaves with them.
The novated lease reverts to a standard finance lease arrangement. When the employee moves to a new employer, a new novation agreement can be put in place.
If an employee goes on unpaid leave whether its Maternity or Annual Leave, the employee will be placed on the standard finance lease arrangement while they are on unpaid leave.
3. It's too much work to administer a novated leasing program
When you’re running a business, we believe your benefits package should be a help, not a hindrance.
With no start-up costs or ongoing management fees, Fleetcare Novated Leasing won’t cost your business a cent! We’ll accommodate any payroll frequency and adapt our processes to match your business requirements.
You and your employees will have access to our team of novated leasing experts available to answer questions and support the promotion of novated leasing within your business.
4. We don’t like to promote financial products to employees in case they agree to something they can’t afford
Our responsible lending policy ensures that we do not enter a novated lease arrangement with an employee, or suggest a lease, or assist an employee to apply for a lease, that is unsuitable.
Before entering into an agreement, we will gather information about the employee’s financial and personal situation and verify that information, to ensure that the lease is suitable.
5. We don’t have a lot of high-income earners, so it’s not worth it
No matter how much an employee earns, if they pay tax, they could benefit from a novated lease.
Whilst those employees on higher salaries stand to save slightly more, employees on lower incomes can still enjoy tax benefits as well as savings such as discounted vehicle pricing, fuel discounts and GST savings.
6. The residual payment is not affordable for my employees
When an employee comes to the end of their lease, we offer a range of options to suit.
- Trade in, trade up – Customers can trade in their existing vehicle to Fleetcare (or sell it privately) and upgrade with a new novated lease.
- Double down – Customers can double their savings by refinancing their existing vehicle and leasing a new vehicle at the same time.
- Refinance – Customers can refinance their residual payout for another lease term.
- Payout – Customers can payout the residual amount and the car is theirs.
It’s worth noting that we provide the residual value each time we provide a quote. No information is withheld, so your employees will be aware of their financial obligations and end of lease options before signing the dotted line.
Our dedicated team of novated lease experts are always on hand to answer questions on all aspects of novated leasing. If you’re ready to learn more about novated leasing or would like to get started, simply call us on 134 333.