What Happens to my Novated Lease if my Company Restructures?

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While it’s not top of mind to you as an employee, company restructuring can be a common occurrence. If you have a novated lease and your company is undergoing changes such as a merger, acquisition, or reorganisation, you might wonder about the impact on your lease. 

In most cases, your novated lease can continue if your employer agrees to take over the lease. This typically involves the new payroll entity signing a novation agreement with the lender for your loan, effectively replacing the previous payroll entity. Follow these steps. 

  1. Informing the Novated Lease Provider 

It’s essential your employer informs your novated lease provider (Clear Lease) about the company restructuring as soon as possible. We can advise you on the necessary steps to transfer the lease to the new entity and ensure a smooth transition. Plus, our team is here to help with any other queries you may have during the process. 

  1. Updating Details

Your employer may need to update your novated lease paperwork with the new entity’s details, including the employer’s name, ABN, and contact information. The Clear Lease team can guide your employer through this process.

It’s unlikely that you’ll need to do anything at this step, as your details have likely stayed the same, and it’s only your employers’ information that needs to be updated. 

  1. Communication with HR

Keeping open communication with your company’s HR or People & Culture department is crucial. They can provide you with relevant information about the restructuring process and any implications for your novated lease.

  1. Reviewing Terms and Conditions

Take the opportunity to review your novated lease terms and conditions during the restructuring process. Ensure that you understand any changes and how they might affect your lease arrangement, including changes to your budget. 

For instance, ensure that your budgeted expenses covered in your novated lease, like fuel and replacing tires, match your actual expenditure. This ensures you won’t be left with a negative balance. 

  1. Seeking Professional Advice

If you’re unsure about how company restructuring will impact your novated lease, it’s wise to seek advice from a financial advisor or legal professional. They can provide personalised guidance based on your specific situation.

Company restructuring doesn’t necessarily mean the end of your novated lease. By staying informed, communicating with HR and Clear Lease, and seeking professional advice when needed, you can navigate through company changes while maintaining your novated lease benefits. There is generally nothing that you are required to do – this is managed between your employer and Clear Lease as your provider. 

FAQ

What happens to my novated lease if I am made redundant?

If you’re made redundant while you have a novated lease, you are still responsible for making lease payments. However, there are options available to help you manage this. 

One option is to terminate the lease early, making a residual payment for the remainder of the loan so vehicle ownership is retained. 

If you are moving to a new employer, your novated lease can be transferred to this new employer, if they agree with the arrangement. This involves the employer taking over lease and running cost payments. 

Clear Lease is here to help you if you do find yourself being made redundant while a novated lease is active. Simply call our friendly team who can help you through the process on 1300 242 280.

Can you transfer a novated lease to another company?

Yes, you can transfer an existing novated lease to another company, so long as your new employer agrees to the arrangement, including taking over your lease and running cost payments. 

To do so, your lease provider (Clear Lease), will require information about this new company, and can arrange this collection directly. 

If you are looking to transfer your lease, speak to us today to learn more about the process. 

What are the risks with a novated lease?

While novated leases are a great way to save money by reducing your taxable income, there are some risks that need to be considered. 

Mileage limits: When you set up your budget with your leasing provider, you will have a limit to the mileage for the year. If you exceed this, additional costs or fees may be incurred. 

Vehicle Depreciation: Like with any lease or even with standard vehicle ownership, the value of your car will depreciate over time. This means that the worth of the car may be less at the end of the novated lease term. 

Residual Value: At the end of your novated lease term, you are responsible for paying the car’s residual value to maintain ownership. This can be discussed at the start of your novated lease process so you have an understanding of what you’ll be expected to pay. 

Who owns the car at the end of a novated lease?

To maintain ownership of the car at the end of a novated lease’s term, you will need to pay the residual value. This amount is agreed upon when you sign your lease agreement, and you can discuss this in further detail with the Clear Lease team.

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