When it comes to buying a personal vehicle or car, people generally go for bank loan process. Getting a loan from the bank would not be difficult when a person has a good credit score and perfect employment background. Bank generally thinks about protection of its money. Hence, it would only allow loans to those who have an excellent credit record or history. Nevertheless, the person must be capable of paying off the monthly loan premiums. That can only happen if the person has a stable income source. Apart from the bank loan, interested car buyers have another choice, and that is known as a novated lease.
Novated lease is an agreement where car buyer and seller is involved along with a third party which is the employer of the buyer. The employer should agree to pay the lease premium on a monthly basis to the seller. The dividend shall be paid from the salary of the employee, and it is deducted before the wage has gone to the account of the employee. Rewarding employees with novated lease has some benefits. Here are those benefits at a glance.
Building Employee Loyalty
Business always wants that its top-performing employees should stay associated with the company. For that purpose, the company plans for rewarding the employees with different kinds of things. Not just salary hike, employees also want some privileges or special facilities from the employer. Novated lease is one of those facilities that employees may expect from the employer. It helps employees to purchase a car quickly. Nevertheless, it also allows employees to gain tax effectiveness. A rewarding novated lease will help employers to build a good relationship with employees.
Giving Pay Hike to the Employees without any Financial Burdens
With a novated lease, business owners can find the opportunity to provide a pay hike to employees without bearing with massive financial burdens. The lease premium has to be paid before from pre-tax salary of the employee. As a result, you can save a sizable amount from coming under the tax bracket. Eventually, employees have to pay lesser taxes, and at the same time, employers do not have to bear with the extra burden of hiking salary. So, it is a win all situation for the employer and employee. To calculate lease premiums and to save on taxes, one can check Novated Lease Savings Calculator.
Simple Contracts – No Liability
In many cases, employers think that a novated lease will fetch liability for them. Well, in reality, there is no liability from the part of the employers. If employees do not remain well performed, employers can close contracts with the employee. In that case, it will be the employee’s wish to decide the future of the lease. A predetermined cost may be paid by the employee to car seller to own the car, or the person can also choose to sell the car.
Novated lease is a legal term, as an agreement has to be between buyer and seller. However, it does not involve any legal hassles for any parties participating in the contract. It is a simple process, and the deal can be made with ease.