A Novated Lease is a three way agreement between an employee (You), an employer and a finance provider. Through a novation agreement, your employer pays the lease payments on your behalf while you are employed to them.
The employee selects the motor vehicle of their choice and, subject to credit approval, enters into a financial arrangement with a finance lender or bank. The most common form of Novated Lease arrangement is a finance lease where the employee enters into a commitment to make monthly car lease payments with a fixed residual at the end of the car lease. (The residual is an amount that is set by the Australian Taxation Office.) Under the novated lease agreement, the employer assumes all the employee's rights and obligations under the car lease, including the responsibility for making the car lease rentals while the employee remains employed by the employer. The finance lease remains in the name of the employee who remains the registered owner throughout the Novated Lease and keeps effective control of the motor vehicle at all times.
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