Ledge Finance

Novated Vehicle Lease

Novated vehicle leases

Traditionally, the provision of a company car has been restricted to employees who need to be mobile for business reasons. In many cases, private use of the vehicle is restricted and often, the employee has little choice as to the make, model, or colour of the car provided. The use of novated leasing can overcome these problems and provides additional benefits to both employees and the employer.

With a novated lease, the employee leases a car (via a finance lease arrangement) from a financier and then sub-leases the car (via a novation agreement) to the employer. The novation agreement is treated as an operating lease for accounting purposes. The employer is then responsible for maintaining the payments whilst the employee works for them.

The employee benefits from choice of car and the ability to change the car, as and when required.

The employer has the car fleet “off balance sheet” which may increase capacity for borrowing for other areas of business. The employer is not liable for the rentals if the employee terminates their employment or has it terminated.