The season ticket loan scheme explained

What is a season ticket loan?

The season ticket loan is an interest free loan for employees to cover the cost of travelling to and from the workplace via modes such as tram, rail, bus or others. The commuting loan scheme we provide to employers can also be used to cover parking costs too.

The loan repayments are paid monthly through the employee’s net pay over a set period.

Typically, paying monthly for your season ticket through a vendor and not through your salary can cost more in the long run as interest applies. This scheme helps employees take advantage of the cheaper annual fee but still spread the cost.

The employer has loads of flexibility with the scheme and can set the maximum loan amount and the number of months employees have to make the repayments.

Employees have lots of flexibility with the season ticket loan scheme too, which we’ll look at further in this article.

Why the scheme is so important

There are loads of reasons why the season ticket loan scheme is so popular with employers and employees.

Changes in recent years have seen the scheme become even more popular and it’s become a key part of many business’ employee benefits offering.

Changes to the way we work

We all know and have experienced the changes to the way we work in recent times. There’s hybrid, part-time or full-time remote and the way people work can vary hugely across different roles, industries and businesses.

The types of work and the different types of commutes that come with it have become more fragmented. This means it’s more important for businesses to make different ways of commuting more viable for staff.

You may have also heard of the introduction of new flexible train tickets or “Flexi-Season” tickets, designed primarily to give flexibility to those travelling by rail just a few days a week, for example those who are working in a hybrid working model.

There are various different types of ticket available but flexible train tickets should typically work out cheaper.

Changes to our attitude towards the environment

Research has shown our attitudes towards the environment and climate change have changed quite dramatically in the last couple of years.

As a result, employees are becoming more conscious about the environmental impact of the different modes of commute.

Lots would prefer to go by rail, tram, or some form of more environmentally friendly public transport; however, the cost can be an issue.

The government’s ideas for rail travel in the UK have caused much debate, but what is clear is that they’re looking to get more people travelling in greener ways to help hit ambitious green targets by 2050.

There’s been support for introducing better cycling infrastructure from the government too, and regardless of how successful these have been or may be in future, what’s clear is that initiatives like these are all designed to get us travelling in more environmentally friendly ways, something which season ticket loans can support.

Changes to more rural living

Rightmove reported in 2021 a 126% year on year increase in interest in moving from a major UK city to a rural location.

Mortgage lenders and estate agents have noted that many want quieter and more affordable homes away from the big cities, with more space for home working.

For those who’ve moved further away from their workplace who might now be returning in some capacity, season ticket loans can help make this travel more affordable and more feasible.

For those who still want to drive to the workplace, the scheme can help with parking which becomes more and more difficult to find in major cities.

By making these modes of transport more feasible for those living more rurally, it widens the net for potential new recruits too.

Other benefits of the scheme for employers and employees

As mentioned, employers have lots of control over the scheme including the ability to set maximum spend limits.

Employers can also decide the repayment period to ensure the scheme works in the best way possible for the employer and the employee.

As employees decide where to use their season ticket loan, there’s minimal admin for employers but maximum flexibility for employees too.

Employees can also use their season ticket loan across a huge range of travel and parking providers, making the scheme even more appealing.

Along with broadening the net of potential new recruits, the scheme helps support employee retention through better supporting employees with their commute.

It’s easy to see why the scheme is provided by so many employers!