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Novated leases: know and understand about three way aggrement

A vehicle novated lease agreement is between your finance company, employer and you. Novated lease is also known as the salary sacrifice or car salary packaging. This trend of purchasing vehicle under novated lease agreement is rapidly increased in many countries from all around the world. Many of the people might also have question that how do novated leases work? When an individual enters into novated lease agreement then that means your employer is ready to do your vehicle payments from your pre tax salary. By doing this the company can also satisfy their requirement tools for the trade fleet as well as providing greater incentives and facilities for their employees.Image result for Novated leases: know and understand about three way agreement

Understating company Agreement: automotive business

In case, employee leases vehicle then on the behalf of their own pre tax salary they can ask their employee for monthly repayments. People should also know that there are mainly three parts of novated lease as finance component, FTB (the fringe benefits tax) and running expenses. There are set for the number of payments for about term lease. You can also set budget amounts by looking at the terms of lease mainly for your running expenses. This is how do novated leases work as this agreement also provides significant financial incentive if an employee makes choice to purchase new vehicle or car.

The owner of the vehicle is always prevailed with the employees. The novated lease can also be transferred to the new employer in case employee changes his job and vehicle goes with him. For the employer the major additional benefit is that vehicle is not deemed as a liability or an asset so it is not shown up in the balance sheet of company. This well maintained activity ensures that vehicle is not asset neither forms of liability for the company.

 

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