Novated leases are an increasingly popular vehicle financing option in Australia, offering tax advantages and convenience for both employees and employers. If you’re considering a novated lease, you probably have a few questions. Here, we answer some of the most common queries about novated leases.
What’s the Difference Between a Novated Lease and a Car Loan?
A novated lease is a three-way agreement between you, your employer, and a leasing company. Your employer deducts lease payments from your pre-tax salary, which can reduce your taxable income and potentially save you money.
In contrast, a car loan is a personal loan that you take out to purchase a vehicle, with monthly repayments coming from your after-tax income.
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Can I End My Novated Lease Early?
Yes, you can end your novated lease early, but it may come with financial implications. You will likely need to pay an early termination fee and settle any outstanding amounts on the lease.
It’s important to review your lease agreement and consult with Clear Lease to understand the specific terms and costs involved in early termination.
Where Can I Find All My Account Details?
You can find all your account details in the Clear Lease Driver Portal. This online platform provides easy access to your lease information, including payment schedules, running costs, and any additional services included in your lease package.
Can I Use My Fuel Card with Other Cars?
No, the fuel card provided with your novated lease is specifically tied to the vehicle under the lease agreement. It is intended to cover the running costs of that particular vehicle, and using it for other cars is not permitted.
What’s a Residual Payment?
A residual payment, also known as a balloon payment, is the final lump sum amount due at the end of the lease term. It represents the vehicle’s estimated value at the end of the lease. You can choose to pay the residual payment to own the car outright, refinance it, or trade in the vehicle for a new lease.
What’s Not Included with My Novated Lease?
While a novated lease covers many costs, such as lease payments, fuel, maintenance, and insurance, there are some expenses it typically does not include. These might include parking fines, tolls, and any modifications or personal accessories you add to the vehicle.
What Happens at the End of My Lease?
At the end of your novated lease, you have a few options. You can pay the residual value to own the car outright, refinance the residual value to continue leasing the vehicle, or trade in the vehicle for a new lease on a different car (you keep any equity on the trade-in). Your choice will depend on your financial situation and future vehicle needs.
What If I Change Jobs During the Lease Term?
If you change jobs during the lease term, you have several options. You can transfer the novated lease to your new employer, who would then take over the salary deductions and lease payments.
Alternatively, you can continue the lease as a standard car lease, making the payments directly to the leasing company. It’s essential to discuss this with Clear Lease to understand the implications and process involved.
How Do I Get Started with a Novated Lease?
Getting started with a novated lease is simple. Work with Clear Lease to choose your desired vehicle and structure your lease agreement. Your employer will then sign the novation agreement, allowing your lease payments to be deducted from your pre-tax salary.
Finally, you can start enjoying the benefits of your novated lease, including potential tax savings and convenience.
