Vehicle leasing comes in a few different forms, and the names can be confusing. Here is a simple guide to the three types of lease PAR Leasing offers and who each one suits.
Fully maintained lease
Best for: businesses, government and not-for-profits that want predictable costs and no hassle.
The leasing company supplies the vehicle and looks after its running costs, such as servicing, tyres and registration. You pay one fixed monthly amount and hand the vehicle back at the end. There is no residual to pay and no resale risk. Not-for-profits can also choose a guaranteed buyback lease, where the end-of-term value is guaranteed up front. Read more about fully maintained leasing.
Finance lease
Best for: businesses that want to own the vehicle at the end, or manage their own running costs.
Your business uses the vehicle for a set term in return for fixed payments. At the end there is a residual payment, and you can pay it and keep the vehicle, refinance or trade in. You look after servicing and running costs yourself. Read more about finance leasing.
Novated lease
Best for: employees who want to pay for a car from their pre-tax salary.
A novated lease is an agreement between an employee, their employer and the leasing company. The employer pays the lease and running costs from the employee’s salary, mostly before tax. Eligible electric cars are exempt from FBT, which makes them especially good value. Read more about novated leasing.
Quick comparison
- Who leases: fully maintained and finance leases are taken out by the organisation; a novated lease is for an employee.
- Running costs: included in fully maintained and usually in novated leases; not included in a finance lease.
- End of term: hand back a fully maintained vehicle; pay the residual on a finance or novated lease, or refinance or trade in.
This is general information only and does not take your circumstances into account. Tax rules can change, so please speak to your accountant or tax adviser before making a decision.
Talk to PAR Leasing
Call us on (03) 8387 1200, email davidb@parleasing.com.au or send us a message for a free, no-obligation quote. PAR Leasing is the fleet division of Alan Mance Motors, based at 237-241 Geelong Road, Footscray, and works with organisations across Victoria and the east coast of Australia.