Novated Lease Agreement
Different types of finance
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Feeling left out in the cold? Equilease allows you to salary package you existing vehicle, through a revolutionary sale and leaseback process, where there is no limit on the age of the vehicle and better still, there is no finance application – meaning that all applications are successful.
So for that much loved older car that you want to salary package but could not or for those who may not want a new car just yet, but want the benefits of a novated lease, there is Equilease.
Equilease allows you to pay for the running costs of your existing vehicle by using a combination of pre-tax and post-tax dollars. Because the car is already owned, the vehicle is worth less and hence more of the running costs are pre-tax. Running costs are paid using a fleet card (service, repairs, fuel) There is no age restriction on the vehicle, and your credit history is not required.
With EquiLease, you refinance your vehicle, but retain equity in the lease, hence the name EquiLease. The lease is provided through Lend@bility who will pay you the sale value of your car (net of the residual, incl GST) over the term of the contract, which can be 3 to 5 years.
- You can pay for the costs of running your car pre-tax.
- At the end of the term, you can take your car back and offset the residual you owe against the residual value Lend@bility owe you. It couldn’t be simpler!
A novated lease agreement is a finance lease with one crucial difference. Normally a loan for a car will be between you and the financier. In order to get the tax deductibility for the lease, there are some terms of the lease that you assign (“novate”) to your employer. This effectively makes your personal car a company car and becomes a benefit of employment, a Fringe Benefit.
|Novated Lease||Sale and Leaseback||Equilease||Hire Purchase||Chattel mortgage||Consumer Loan|
|Who owns the car||Financier, until the last payment is made||Financier, until the last payment is made||Financier, until the last payment is made||Financier, until the last payment is made||You do, with the car as security to the financier||You do, with the car as security to the financier|
|Credit application||Yes||Yes||No, do not require a clear credit history||No||optional||optional|
|Age of car||New or near new||Up to 7 years at the end of the lease||No age limit||Less than 12 years at the end of the term||Less than 12 years at the end of the term||Less than 12 years at the end of the term|
|Repayments||Monthly, in advance or arrears||Monthly, in advance or arrears||Monthly, in advance or arrears||Monthly, in advance or arrears||Monthly, in advance or arrears||Monthly, in advance or arrears|
|Term||12 to 60 Months||12 to 60 Months||36 to 60 Months||12 to 60 Months||12 to 60 Months||12 to 84 Months|
|Balloon or Residual||Required as per ATO Guidelines||Required as per ATO Guidelines||Required as per ATO Guidelines||No||No||No|
|Tax deductible for employees||Yes||Yes||Yes||Possible through operating cost and log book||Possible through operating cost and log book||Possible through operating cost and log book|
When you salary package a car through a novated lease, the Australian Tax Office require that you need to have a residual value for the car, which is close to the market value at the end of the lease. This is because the car has a value in your hands which is not taxed at the end of the lease. If you were allowed to pay off the car in full, then when you sold the car the proceeds would not be taxed and the ATO would have given you a free benefit and that is why there is a residual value. That also means that if you make a profit (above the residual value) when you do sell the car, then that profit is not taxed.
Get Pre-Approval now
Go and test drive cars to refine your choice of vehicle and perhaps obtain a quote, but do not sign for the purchase of the car
Contact Us for finance preapproval and to be referred to a fleet manager to get discounts on the vehicle you want
Once you are happy, the fleet manger will give the quote which we will process, finance and arrange for all paperwork to have a speedy delivery