Getting the right car financing plan in place when you are ready to purchase a new car can be stressful and frustrating because things can be quite technical. But The Smarter Finance Company aims to make its products easy to understand so that you can be prepared for how the loan works to your advantage! Here you can find out more about how the novated lease can work for you!

How it works
A novated lease is a financing tool that helps a potential car owner to finance their car with the help of their employers. Basically, your financing company helps you to work out an agreement with your employer regarding the provision of a car to you as part of your employee benefits. The loan is laid out such that your employer helps you to make payments towards your loan by routing a portion of your salary to the lending institution.

There are 2 types of options with a novated lease – a maintained novated lease and a non-maintained one. Both offer you a different degree of control over your “company-provided” car. You can choose to manage your fuel, servicing and maintenance, insurance and other variables on your own in a non-maintained novated lease, or have them all included in your package so you can just sit back and enjoy the car.
The car can be easily transferred when you change companies when your new employers are agreeable to help continue this arrangement with the lender on your behalf.

Pros
There are lots of reasons why people choose the novated lease as their preferred financing plan and not only to the borrower, but to the businesses that play a part in all of this too! Firstly, businesses are perceived as caring and understanding about the needs of their employees when they agree to help with the funding of the vehicle and of course the employee gets the car out of a deal with a suitable method of payment conveniently arranged for their benefit. In addition, as a business expense, both sides are able to receive tax deductions for the cost of the car.

Since the business is involved in arranging the payments to your lender, there is a much smaller risk when it comes to lending money to you since the lender can go after another party if there is a chance of default. It’s important to ensure that both parties are available for discussions to understand how the contract will work so that both you and your employer reap the benefits of the agreement.

Cons
The car is under your name so while you can take the ownership of the car, what happens if you are unemployed? You are liable for the payments of your car now without your income. And while that can be a very scary circumstance, it’s a good thing that there are insurance policies available to cover that possibility. You may also need to figure out how to ask your employer to agree to this arrangement too and that might be a very sensitive conversation!

A novated lease sounds like a fantastic idea for people who are in the market for a new car and have a stable income that can help foot the bills. It’s easy to take advantage of that when the set up has been settled. Ask a professional financial consultant like The Smarter Finance Company to work out the figures for you so that you can decide whether you would like to explore this option with your company!