Changing jobs can bring about numerous considerations, and if you currently have a novated lease, it’s important to understand how it may be affected. Let’s talk about the implications of changing employers on your novated lease and provide valuable insights to help you navigate this transition smoothly.
The Impact of Changing Employers on Your Novated Lease: Explained
Understanding Your Novated Lease: Before we dive into the specifics of changing employers, let’s quickly recap what a novated lease entails. A novated lease is an agreement between you, your employer, and a finance company, allowing you to lease a vehicle using your pre-tax income. It offers benefits like tax savings, convenience, and potential savings on running costs.
If You Change Jobs with a Lease – What Are Your Options?
Transfer the Lease:
If your new employer supports novated leases, you may have the option to transfer your existing lease to the new employer. This allows you to continue enjoying the benefits and convenience of a novated lease without interruption. Ensure you communicate with both your current and new employers and work closely with your novated lease provider to facilitate a smooth transfer process.
Continue Paying the Lease and Running Costs as a Traditional Car Loan:
If your new employer doesn’t offer novated leases or you prefer a different financing arrangement, you can choose to continue paying the lease and running costs as a traditional car loan. In this scenario, you become solely responsible for the financial obligations associated with the lease. Consider consulting with a financial advisor to evaluate the feasibility and impact of this option.
Pay Out the Amount Owing:
Another option is to pay out the outstanding amount on your novated lease. This allows you to terminate the lease agreement, take ownership of the vehicle, and assume all associated costs independently. It’s important to consult with your novated lease provider to understand any fees or penalties associated with early termination.
What other factors should I Consider?
What if a New Employer Says No to a Car Lease?:
When considering a job change, it’s crucial to research the novated lease policies of potential new employers. Some employers may have restrictions or limitations on novated leases, while others may fully support and offer attractive benefits. Understanding their stance on novated leases will help you make an informed decision and assess the impact on your vehicle financing.
Evaluating the Financial Implications:
Changing employers can have financial implications on your novated lease. Factors to consider include changes in income, salary packaging benefits, and potential tax savings. Consulting with a financial advisor or accountant can help you assess the financial impact of the job change on your novated lease. They can provide guidance on any adjustments needed and help you make informed decisions based on your unique financial situation.
Reviewing the Lease Agreement:
Before making any decisions regarding your novated lease, carefully review your lease agreement. Pay attention to clauses or terms related to changing employers. These may outline the procedures, requirements, and potential costs associated with transferring the lease or terminating the agreement. Understanding your rights and obligations will ensure you are well-prepared to handle the transition smoothly.
Choosing a Lease Term Aligned with Your Plans:
When considering a novated lease, it’s essential to assess the timeframe you plan to stay in the workforce. Selecting a lease term that aligns with your plans can be a smart decision. For example, if your intention is to retire in four years, opting for a lease term of four years or less would be suitable. Similarly, if you have a three-year contract with your employer and don’t intend to continue beyond its expiration, exploring short lease terms can cater to your specific needs.
Exploring Options with Residual Value:
Novated leasing programs always involve a residual value, which represents the vehicle’s remaining worth at the end of the lease term. If you find yourself wanting to extend your stay beyond the initial lease term, there are options available to continue enjoying the benefits. Re-leasing is one such possibility where you can explore the opportunity to continue the lease by transitioning into a new agreement. This flexibility allows you to adapt your novated lease to your evolving plans.
Seeking Guidance and Assistance
Keep Your Novated Lease Provider Up to Date:
Throughout the job transition process, it’s essential to maintain open communication with your novated lease provider. They are experienced in handling novated lease transfers and terminations and can provide specific information and guidance based on your situation. They will assist you in understanding the steps involved, providing necessary documentation, and addressing any concerns or queries you may have.
Seek Professional Advice:
To make well-informed decisions regarding your novated lease, consider seeking professional advice from a financial advisor or accountant. They can analyse your financial situation, evaluate the impact of changing employers, and offer personalised guidance.
Professional advice will ensure you have a comprehensive understanding of the financial implications and help you make choices aligned with your long-term goals.
Changing employers can have implications on your novated lease, but by understanding the available options and considering the relevant factors, you can successfully navigate this transition. Remember to communicate with your novated lease provider, review your lease agreement, and seek professional advice when needed. With careful planning and informed decisions, you can ensure a seamless continuation of your novated lease journey.