A good novated lease company will understand that the product can be a little complicated and confusing. Most people might say, “What the heck is a novated lease?”. So if you chat to providers and they’re leaving you feeling confused or telling you to just trust them, that’s your first red flag.

You should understand what you’re getting into and a good provider will take the time to answer your questions, provide plenty of information and resources, and make you feel confident in your decision.

The right provider will try to understand your situation in detail. If you feel like you haven’t had much chance to talk through your circumstances or what you want (and don’t want), chances are you’re getting a product off the shelf, which probably won’t suit you and certainly isn’t customised to your needs.

You’re not a cookie, so step away from the cookie cutter. A good novated lease company will ask you heaps of questions, chat through options and try to not only find the right product but also explore the little details that can save you extra.

If you’re chatting with a provider and most of the conversation is geared towards you signing on the dotted line, rather than helping you to understand the service and onboarding process, chances are you won’t get much help once the lease is underway.

If you feel like just another number on their sales team’s tally, then you probably are. So look for a provider who not only guides you through the sign-up process but also is transparent and clear about how the lease will run and your options after.

Novated leases can be incredibly handy to cut costs and make running a car much less stressful, but this is a long-term financial commitment, so having a company that’s on your side from start to finish will make a world of difference.

This is true.

You need to be employed and paid via PAYG to qualify for a lease.

It’s also true that should you leave or lose your job, you’ll need to take on payments of the lease yourself until you find a new job. If your new employer doesn’t currently offer novated leasing, they can get set up with Leaselab super quickly and easily (we have an employer guide for that).

So, while some perceive this as a “trap”, it’s more of a consideration. If you’re someone who changes jobs often, or may have long periods between jobs, novated leasing might not be for you (see “Is novated leasing right for me?” if you want to explore further).

It’s worth noting that you can leave a novated lease at any time simply by paying out the lease. You’re not locked in for the full term, which is between 1-5 years.

This is false.

You need to be approved by a financier for a novated lease, which we handle on your behalf as a part of the process. So you won’t be able to borrow more than you can afford.

But perhaps more importantly, a good novated lease provider will also go over all of your financial details with you and ensure your payments aren’t too high and you’re not burdening yourself with an unrealistic outlay.

Your novated lease provider will base your application on the information you provide, so you need to be completely honest with them (and yourself) about what you should be spending on a car.

A good novated lease provider will be able to provide you good value for as long as you need a car, so it’s in their interests to give you a great experience and help you into your next car. They’ll want to ensure that the novated lease package you’re taking on aligns with your goals and ensure the price you get for each car is fair and, where possible, a significant reduction on the price if you were to buy outright or get a car loan.

When your lease ends, a good novated lease provider will ensure you’ll have a “residual” (the remaining balance on the car) that’s lower than the value of your car, putting you in a solid financial position at the end of the lease term.

This is false.

Novated lease packages allow a lot of flexibility.

If a novated lease provider tries to force you to use a particular third-party provider for insurance, servicing, roadside assistance or another optional inclusion, then they’re probably not the best choice of provider.

A good novated lease provider will let you include only what you want to, and let you use the suppliers you prefer. 

In some cases, you may be able to bring your service provider to your novated lease package and still save money in comparison to the novated leasing company’s suggested provider. If not, you should still be able to use your preferred supplier and pay separately for your novated lease – just be aware that you won’t save as much money because it won’t be paid out of your pre-tax income.

This is true(ish).

Some novated lease calculators might stack things in – such as showing your expected monthly fee inclusive of all fees and running costs, rather than breaking the fees down separately.

But this is mainly so the calculator doesn’t confuse you and serves its main purpose – most people just want to know what it costs. Calculators are good for giving you an idea of the overall picture, but they’re only based on a best estimate of common circumstances.

There are individual factors, such as tax brackets and business usage, which can make a one-size-fits-all calculator too simplistic for finding the perfect package for each person’s unique situation. Plus you might want certain inclusions on your car, which a calculator can’t take into consideration. A calculator also can’t account for the various ways you can structure a lease to maximise your savings.

For an accurate number, it’s best to get a personalised quote from a novated lease provider to understand how much you can save.

If you’re not sure, just ask your provider.

If you need any further assistance, don’t fret. Give us a call on 1300 888 594 and we’ll talk you through options for your situation.

For this one – it depends.

If you have a good novated lease provider (again, us!), they’ll be fully transparent on all costs and fees upfront. There really is no good reason for your provider to hide fees from you, as the standard service fees are both fair and relatively low in comparison to the tax savings you get access to. 

If you’re struggling to get clarity, you probably need to find another provider. 

So how do the fees work?

With a novated lease there are four parties involved:

1. You: Payments come from your pre-tax salary, and you’re ultimately responsible for your lease
2. Your employer: They make payments on your behalf from your salary
3. Your novated lease provider: They facilitate and manage the lease and connect all parties involved
4. Your financier: They provide the funds to pay for the upfront purchase of your car

Your financier and novated lease provider build in their monthly fees into your lease payment, which they receive as a return on their investment for putting up the cash to purchase your car. But your incredible tax savings far outweigh any interest you’ll pay, and the idea is that a novated lease avoids you having to commit a huge sum of money upfront (like when buying the car outright) and makes life much more convenient. Plus, your novated lease provider should manage everything for you - from reporting, to payments, to budgeting, to general support - which is how they earn their fee.

Don’t forget that these fees come out of your tax savings, which is essentially money you ordinarily wouldn’t receive because it would be going to the tax office instead. So you’re still well and truly in positive savings territory.

It’s a bit like when you do your tax return and pay your tax accountant a fair fee for their service, because on the whole they’ve saved you more money than they cost you.

With all these perceived traps considered, it still holds true that a novated lease has benefits that simply aren’t available when buying a car outright or with a standard car loan, which involves making payments out of your post-tax income instead.

So, is a novated lease a good option for you?

With a novated lease, you don’t have to drop tens of thousands of dollars upfront as you would with buying a car outright. Ultimately, the key here is the ability to pay for a vital asset with money you’ve earned that would otherwise go to the tax office.

Of course, there are genuine considerations. But hopefully, we’ve made a strong argument for novated leasing with enough clear information to inform your research.

If you have questions and want to quiz the subject a little more, we’d love to chat and share our extensive knowledge in this area. We also pride ourselves on being able to find novated lease packages that best suit people’s unique situations.

Leaselab works within guidelines from the Royal Commission and includes only the items that you would need to ensure a perfect fit. We like to educate our customers thoroughly, sharing as much information and as many options as we can both upfront and throughout the lease. That’s how we keep you fully informed and across the process, so you can always make the best decisions for you and your finances.