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Cars for Employees: Finance Options

It’s quite a common practice for businesses to provide some of their employees with a car or other type of vehicle in order to carry out their role. Jade Car Loans works with businesses to structure cost-effective motor vehicle finance to purchase company cars all the time.

Having a ‘company car’ has long been seen as a great job perk and a very appealing detail in recruitment ads. This offer is usually reserved for employees that need to drive around or travel on behalf of the company, such as reps and for those that need to have access to specialist equipment on the job such as service techs and tradies.

These types of company cars are in a different category to a driver whose job involves driving the company trucks or delivery vans. The ‘reps’ with the company cars usually get to take the vehicle home with them and use it for their private purposes as well as company business. The ‘company car’ is essentially their car while employed by that business. But when they leave the business, they leave the car with the company.

There is another category of company-purchased cars for employees and that is when the employee sacrificing a portion of their salary towards the purchase of the car and ends up owning the car and takes it with them when they leave that job.

Jade Car Loans provides different types of loan products for these different categories of ‘company cars’

Wholly-Owned by Company Car Finance

To purchase company cars for use by their employees but owned entirely by the business, Jade Car Loans provides the full range of commercial finance facilities including:

While these finance types have varying features and benefits in regard to tax and accounting aspects, they all involve a business purchasing a car in the company name and the vehicle is then wholly owned by the business when the loan term is finalised. The loan deal is between the employer and the lender.

The company can then offer an employee the use of that car while they are employed by the business and FBT may apply. The appeal to employees is having a fully-maintained car so they don’t have to purchase their own car or cover the ongoing costs. But they usually don’t have a choice as to what type of car they get and when they leave that job, they can’t take the car with them. They may also have to drive around with the company signage on their car, even when driving for private purposes.

Novated Lease with Salary Sacrifice

An alternative is purchasing the car under a Novated Lease with Salary Sacrifice. Novated Leasing is designed for employers that want to provide a vehicle for an employee and the employee has agreed to sacrifice a portion of their salary towards the purchase of the vehicle.

Under this type of finance product, the company pays all the car costs including lease payments and these are deducted from the employee’s pre-tax salary. The employee is sacrificing a portion of their salary each month but at the end of the lease term, they own the car.

We have dedicated a web page to explaining the details of this finance product and you are welcome to call one of our Jade Car Loans consultant for further clarification. But here are the key details:

  • Employee choosing car and novates or replaces their employer for themselves on the car lease contract with the lender.
  • This is a contract between employee, employer and the lender.
  • The employer pays the monthly repayments and other car expenses and receives the relevant tax and other accounting benefits.
  • The costs are deducted from the employee’s pre-tax salary which may result in the employee paying less tax that is in a lower tax bracket.
  • When the all lease payments and residual are finalised, the car ownership is signed over to the employee.

This type of finance offers potential benefits to both employer and employee and may be suggested by either party. The employee gets to select their car and when they leave that job they depart with the car. If they leave the job before the lease term is finalised, they would need to make arrangements with employer and lender in regard to the lease and car ownership.

Buying Company Cars

Jade Car Loans provides a range of finance options for companies wanting to provide employees with cars. With current wage growth slow and interest rates low, offering a company car may be an attractive option for some employees and employers. We always advise you discuss accounting and other financial strategies with your accountant.

For a no-obligation discussion around finance for company cars or for a quick quote or to commence a finance application, please contact us.

To discuss finance to purchase company cars, speak with a Jade Car Loans consultant 1300 000 003

DISCLAIMER: ALL INFORMATION PRESENTED IN THESE ARTICLES IS FOR GENERAL INFORMATIONAL PURPOSES AND BUSINESSES AND INDIVIDUALS SHOULD SEEK INDEPENDENT FINANCIAL ADVICE IN REGARD TO THEIR OWN FINANCIAL DECISIONS AND CIRCUMSTANCES. DETAILS ON GOVERNMENT MEASURES, POLICIES AND GUIDELINES AND VEHICLE DETAILS AND SPECS HAVE BEEN SOURCED FROM PUBLICLY AVAILABLE WEBSITES AND SOURCES. LIABILITY IS NOT ACCEPTED FOR ERRORS IN INTERPRETATION OR PRESENTATION OF ANY FACTS AND DETAILS FROM THIRD PARTIES. WE ADVISE INDIVIDUALS TO CHECK DETAILS DIRECTLY AT THE THIRD PARTY SOURCE IF REQUIRED.

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