Busted: 10 common myths about novated leasingFor your employees
While novated leasing is a very popular option for Australian employees, there remain some myths and misconceptions that prevent some employers from offering it.
Novated leasing is a powerful benefit that employers can strategically introduce into their company culture, and can reward both the employer and employee in a multitude of ways.
LeasePlan has heard many misconceptions firsthand, and we’ve become adept at setting the record straight when we implement novated leasing programs with our customers.
Here are some of the myths and misconceptions you may have heard, and may even believe yourself
1. “I don’t see any real benefits for my employees in novated leasing.”
There are many benefits to novated leasing, not just for the employee but for the employer too.
The multitude of employee benefits include:
- Tax-effective finance payments and operating costs of the car
- GST savings on the car purchase, fuel, servicing, parts and labour
- A potential lump sum benefit if the car is sold at the end of the lease
- The freedom (and joys) of having a new car
But employers also benefit through novated leasing programs. Employers can take advantage of payroll tax reduction, salary packaging payroll integration, work cover calculation savings and risk mitigation.
2. “I don’t want the company to have any liabilities.”
You won’t. There is no money for the employer to pay and the risk of a novated lease falls solely to the employee and the leasing company. If the employee leaves the company, the car goes with them and so does the risk.
3. “A novated leasing arrangement doesn’t provide any employer benefits.”
A novated lease is a great way to provide employees with a benefit that is easy and does not cost the organisation any money.
In addition to the employer benefits previously mentioned (see myth one), your employees will see this as a tangible reward that supports a positive company culture. You will also gain satisfaction in knowing you have provided a benefit that your employee’s family can enjoy – and savings that impact their household’s bottom-line.
4. “We provide tool-of-trade cars for employees.”
A novated lease is not restricted to your employee as the driver. In fact, many novated leases are for a spouse or child. They can provide peace of mind for your employees knowing that their family members are driving newer cars with the latest technology and safety features available.
5. “It is too much work to administer a novated leasing program.”
The benefit of offering novated leases far outweighs any administration effort. LeasePlan will design onsite education, payroll integration and reporting to take all the hassle away from you. We provide a truly outsourced solution.
6. “None of our employees do any driving for business.”
The car can be used for personal or business purposes. There is no minimum requirement or need to maintain a logbook.
7. “We don’t like to promote financial products to employees in case they agree to something they cannot afford.”
We don’t want to sell something they don’t need; we want to help them save money on something they do need and are likely to purchase anyway.
Novated leasing will make it more affordable for your employees to own and operate their cars, while helping position you as an employer of choice.
Our job is to ensure every employee fully understands the ins and outs of the lease before they agree to it, including the interest rate and cost to their take-home pay, as well as the end of lease options and what happens if they leave their place of employment.
Additionally, all your employees who choose a novated lease with us go through a credit application to ensure they can afford the lease payments on top of any existing obligations. We also encourage them to get their own independent financial advice to address any specific circumstances.
8. “I am not comfortable selling to my employees.”
This isn’t about selling to your employees – it’s about offering them a genuine benefit that will impact positively on their lifestyle and finances. Australians love their cars, and novated leasing just allows your employees to save money when they are looking to get a new car.
Plus, as the employer, once you’ve signed-up to a program, LeasePlan does all the rest. We present it to your employees, we answer their questions, and we administer the program on an ongoing basis so there is no need for you to promote the program yourself. Your employees only choose to take up novated leasing when, and if, they want it.
9. “We don’t have a lot of high income earners, so it’s not worth it.”
Novated leasing will help any new car buyer save money. In fact, the salary packaging benefits can be greater for lower income earners. Regardless of salary, this is a simple way that you can enable any employee to save money if they want a new car.
10. “My employees don’t travel enough kilometres to enjoy the benefits.”
There was a time when the more miles you covered in your novated car, the more you saved. Not anymore. Now, every novated lease car will enjoy the same FBT concessions, regardless of how many kilometres they travel each year. It can be argued that the benefits are greater the fewer kilometres you travel.