Novated lease

The most popular way of packaging a car is through a novated lease, which is a three-way contract between the employer, employee and a lease company.

One of the benefits of a novated lease is that at the end of the contract period - usually between three and five years - the employee has the option of returning the car and ending the lease. Or, the employee can choose to pay a fixed percentage of the purchase price of the car, called the ''residual'', and take possession of the vehicle. There are many other benefits: insurance can be cheaper because the employer or lease company will buy cover at wholesale rates. Other benefits include 24-hour roadside services and a fuel card, which can simply be swiped at the petrol station. Packaging also helps with budgeting. A fixed amount comes out of the employees' pay to cover all of the running costs, including regular servicing, change of tyres, and fuel costs.