What is a novated lease? 

With a novated lease, you use your pre-tax salary to pay for your car and running costs. It sounds so simple, but it’s a total game-changer.  

Who is involved in a novated lease? 

A novated lease is basically a three-way agreement between an employee (that’s you!), an employer and a leasing company (like Leaselab). Instead of paying for your car with what’s left of your salary after tax, a chunk of your pre-tax income goes straight into covering the lease. How good!?

1. An agreement is set up between you, your employer, and a lease provider.
   
2. Instead of you paying for your car outright, you enter into a lease agreement for the car for a fixed period between 1 and 5 years.
   
3. Then, your employer takes on the novated lease payments and makes them on your behalf by deducting the cost of your car from your pre-tax salary, thereby reducing the income tax you pay each pay cycle.
   
4. Your car payments are fixed, so you know what you’re paying for your car each month.

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Bundle all your on-road running costs and save thousands

What costs can be included in a novated lease? 

Your lease can also bundle in running costs like fuel (or charging, if you’re going electric), servicing, and insurance – making life easier and potentially saving you a decent chunk of change.

You can customise your novated lease to suit your needs, choosing to cover just the vehicle, some of the running costs, or all of them.

How do tax savings work? 

Tax savings with a novated lease come in two ways. First, the GST discount. The finance company buys the car on your behalf and claims back the GST, lowering your lease payments right away.

Then, there's salary packaging. By using your pre-tax salary to cover the lease and running costs, you reduce your taxable income and potentially pay less tax – leaving more money in your pocket.

And the best part? With the government’s exemption for going electric, electric vehicles that are salary packaged are exempt from Fringe Benefits Tax (FBT). What’s not to love?

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How do I apply for a novated lease?

Eligibility requirements

To salary sacrifice your car and qualify for a novated lease, you do need to be employed and paid via PAYG. Your employer also needs to offer novated leasing. 

What if my employer doesn’t offer novated leasing? 

If your employer doesn’t offer novated leasing, we’re happy to talk to them and walk them through the incredibly easy process.

We love making people’s lives easier, so we’ll work hard to make sure both you and your employer are happy!

What documents do I need to apply? 

To help us understand your situation and process your application smoothly, we recommend having the following documents ready: 

1. Identification: Most of the time, a clear colour copy of your driver’s licence (front and back) showing your current address is all you’ll need. 
2. Proof of Income: For most novated lease applications, a recent payslip showing your pre-tax and after-tax income is required. 
3. Proof of Address: If you've only recently moved to your current address, the financier may request further proof of where you live.
4. Additional Information: You’ll also need to provide details about your assets, liabilities, and regular expenses. This helps the financiers assess your financial standing and determine your eligibility for the novated lease.

How long does the approval process take? 

On average, it takes about 1-2 weeks to get everything sorted. The exact timing can depend on a few things – like whether your employer is already set up for novated leasing, how long it takes to choose the perfect car, and whether it’s in stock.

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How much can you save with a novated lease? Use our calculator to find out! 

Use our novated lease calculator to get an instant estimate on how much you can save. Our guess? Thousands. Every year. 

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Why choose a novated lease for your next car?

Novated leasing vs. car loan vs. outright purchase 

A car loan lets you borrow money from a bank or lender to buy a car. You’ll pay it off over time, with interest. While this means you’ll own the car at the end, you’re paying for it using your after-tax salary, which means you’re taxed on the full amount.

‍Buying a car outright is just that. You’ll pay the full price with your own cash, no strings attached. You own the car straight away but without any tax perks. Plus, all the ongoing costs, including running expenses, come out of your after-tax income.

In comparison, a novated lease offers significant tax savings, flexibility, and no upfront payment – making it an appealing choice over car loans or buying outright.

Are there any downsides to a novated lease? 

While there are plenty of perks with a novated lease, these are a few things to keep in mind. The two main downsides are: 

1. No Ownership

With a novated lease, you don’t own the car, so you can’t make changes to it or use it as an asset for borrowing.

2. Job Change Risks

If you change jobs or lose your job, your new employer might not offer novated leasing. In that case, you’ll be responsible for the car payments, which could include early exit fees and the remaining residual value.

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Is novated leasing right for me?

If you’re looking at buying your next car, you may be - and should be - considering a novated lease.

That’s because novated leasing is one the most cost-effective and financially rewarding ways for you to purchase and run your car. It is also one of the very few ways that an employee can create a significant tax break.

Novated leasing is a godsend for car seekers who want to be savvy with their budget but don’t want to compromise on their needs.

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8 questions to ask yourself to know if a novated lease is right for you:

1. Do you have an employer (PAYG)? 
2. Is your employer set up for novated leasing? And if not, are they willing to be?
3. Are you ok with having your employer involved in the process?
4. Is lowering your tax bill of high importance to you?
5. Are you spending more than you’d like on fuel and car servicing and would you like to use your pre-tax income to reduce your spend?
6. Are you interested in bundling all of your car costs within one easy monthly payment?
7. Are you ok with taking on monthly payments yourself if you’re in between jobs and without an employer (as you would with loans or credit cards)?
8. Is the car you get important, and would you like access to wholesale pricing to potentially get a better deal on a car?

If you answered ‘Yes’ to most of the questions above, chances are you’re a good fit for a novated lease.