Novated Leases

[Cottoneyes]

Our company currently uses one provider for novated leases which in my experience is quite common for most businesses. I'm currently reviewing our agreement with them and have noticed they charge over 20% interest (based on my calculations on current leases) on the financing portion of the vehicle which in most calculations takes away any tax benefits for the majority of our employees (ie instead of paying our taxes, we're instead just paying the money to the finance company). Considering most personal loans currently are running around 12-13% interest, I think this is quite expensive considering you still don't own the car at the end.

Having looked at the online calculators for most novated leasing companies they all seem to be charging around the same percentage. I would have thought with the reduced risk on not getting paid due to the direct deductions from the pays, the opposite would have been the case.

Does anyone know of a company that charges something below 15% interest or would give the individual employees the choice to source their own finance to package into the novated lease? Even better if they will deal with smaller companies of around 20 employees novating (with possibly more once the rates are fair)

[Zenra]

Hi Cottoneyes,

Your right, most employers only offer one fleet provider in the belief of simpler processing for their accounts\payroll but its at the cost of the employee.
By offering a second fleet provider, employee's education process is much more rapid and they maximise their take home pay through choice.

The employee can compare vehicle pricing, finance repayments and impacts of a budget.
And if the service provided doesn't suit the employee, they have the option to move to the other provider will a very low or nil cost.

Current novated lease rates are well under 20%, however it could depend on how you are seeing the numbers.

Originally Posted by Cottoneyes

Does anyone know of a company that charges something below 15% interest or would give the individual employees the choice to source their own finance to package into the novated lease? Even better if they will deal with smaller companies of around 20 employees novating (with possibly more once the rates are fair)

Yes... Us.
We would be more than happy to chat further with you.

[Zenra]

Hi Cottoneyes,

Your right, most employers only offer one fleet provider in the belief of simpler processing for their accounts\payroll but its at the cost of the employee.
By offering a second fleet provider, employee's education process is much more rapid and they maximise their take home pay through choice.

The employee can compare vehicle pricing, finance repayments and impacts of a budget.
And if the service provided doesn't suit the employee, they have the option to move to the other provider will a very low or nil cost.

Current novated lease rates are well under 20%, however it could depend on how you are seeing the numbers.

Originally Posted by Cottoneyes

Does anyone know of a company that charges something below 15% interest or would give the individual employees the choice to source their own finance to package into the novated lease? Even better if they will deal with smaller companies of around 20 employees novating (with possibly more once the rates are fair)

Yes... We would be more than happy to chat further with you.

[HeyPete]

NLC and Paradigm are 2 companies used by a company I know of...

both are very competative... NLC more so.

[Tasman McManis]

Hi Cottoneyes,

I think it is worth shopping around and comparing offerings from providers. Often the difference in the cost of money is not the tipping factor in taking on the provider. One provider may have a higher cost of money but get better deals with service, purchase cost and provide employees with better information especially in understanding what type of vehicle will suit them best. Resale is a critical part of the transaction that is often ignored at the point of purchase. As a recommendation I suggest you give Autoptia a call. Regards Tasman

[Cashoscar]

Hi Cottoneyes,
It's difficult to say what the interest rate is without looking at the figures and what inclusions are in the lease: such as registration, servicing etc.

Interest rates should be based on conservative margins over and above the swap interest rates and really this rate should not be more than 10%. However again you need to look at fees, inclusions and the type of lease.

I don't know any fleet companies who would enable you to source your own finance as this is where they make the money from, however really you should be able to raise your concerns with the fleet company and have them explain how the payments are calculated.

Some fleet companies insist on having contracts in place for a set period (usually 3 years) so you have to use them for this period- realistically, if you aren't happy you should be able to leave.

I'm the General Manager of an Australian owned Fleet Company. If you would like to discuss further please send me a personal message.