Steps to getting a novated lease car

The novated lease can seem complex and overwhelming at first, even if you’re excited about the broad range of advantages. We’ve put together the simple steps to getting a novated lease car package, from research to renewal.

Quick pit stops: 

• You can read more about the benefits of a novated lease in our in-depth rundown.

• If you’re interested in understanding which cars qualify for a novated lease and how to choose a car, see our “Independent advice for choosing the best car for you on a novated lease” guide.

And one more thing: there are a few considerations with novated leases, most importantly you’ll need to check if your employer offers novated leasing.  See how to get your employer set up in our employer guide.

The 9 steps to getting a car on a novated lease

Ok, back on track. The process for getting a novated lease car package can be broken into the following steps:

Step 1: Calculate your savings, then get a quote

Step 2: Review your quote

Step 3: Get finance approval

Step 4: Reserving your car

Step 5: Signing your agreement

Step 6: Final approval and getting your car

Step 7: Welcome kit

Step 8: During your lease

Step 9: End of your lease

That might seem like a lot of steps, however each one is short, simple and, as you’ll see, has very little for you to do. So that you can fully understand the experience clearly, we’ll run through each one, beat by beat.

Step 1: Get a quote

Once you’ve done your research and due diligence, and decided that a novated lease is a fit for you, the first step is to get an obligation free quote from your preferred novated leasing company. This should only take 10 minutes and you can do it over the phone. You only need to provide basic details at this stage, such as the type of car you want, how much you think you’ll use the car, some salary info, etc. If you haven’t picked your car, a good novated lease provider will be able to help with that and offer independent, knowledgeable advice.

Step 2: Review your quote

You’ll be emailed your quote within an hour. With a good novated lease provider the quote should be easy to understand (and hopefully just a one-pager), but don’t forget to ask lots of questions if there’s anything you’re not sure about. At this time, it’s a good idea to chat to your employer and check if they offer novated leasing and, if not, if they’d be willing to. Our simple employer guide gives them everything they need, or if you’d prefer you can suggest us to your employer and we can share our knowledge and guide them through it.

Step 3: Finance approval

If you’d like to go ahead with your quote, you’ll do a finance pre-approval application, which should be short(ish), and your novated lease provider can get you green lit for this before the final ok from the financier (which is the company providing the funds for the car that your lease payments go to).

Step 4: Reserving your car

Your novated lease provider will contact the dealership and secure your car, so that it’s ready for you sooner.

Step 5: Signing your agreement

There’ll be some paperwork for you and your employer to sign in order to get things set up and get the final green light from the financier to pay for your car. For you it’s fairly standard terms, most importantly the authorisation for your employer to take car payments from your salary as part of your salary sacrifice arrangement. Your employer signs that too, and also a direct debit agreement (which will be short and similar to the standard terms for direct debit).

Step 6: Settlement and getting your car

Once all the paperwork has been signed, your novated lease provider will take care of settlement. They’ll then tell you how and when you can pick up your new car.

Step 7: Welcome kit

You’ll get an email from your novated lease provider confirming that you’re on board and that everything has been approved. Your employer will also receive an email detailing the payment amounts they need to apply to your pay cycle – from here, it’s really set and forget for them. A short time later you’ll receive a welcome kit from your novated lease provider, which will include your fuel card and service and maintenance card.

Step 8: During your lease

And then you’re off. All of your car payments are taken care of and you can enjoy not having to worry about paying car expenses from your bank account. During your lease, if you have any fuel or servicing expenses that you haven’t used your novated lease account cards for, you simply need to send your receipts to your novated lease provider and they’ll reimburse you. You can also get a report on your account balance at any time by getting in touch with your provider. To understand more about running costs and your novated lease account, see our ‘What's included in a novated lease salary package?’ article. 

Step 9: End of your lease

When you’re a few months out from the end of your lease, your novated lease provider should be in touch to chat you through your various options. That way, you’ll have time to think about what you’d like to do. Which option you decide upon really depends on your circumstances, however novated leases are set up to put you in the best possible financial position, not just in terms of the sizeable tax you can save, but also with your car and its value at the end of your lease. 

You might choose to:

1. Upgrade your car – get a new lease and pay around the same amount. If this suits you, you can sell your current car, pay off the residual fee (the balance remaining) and pocket the difference for another windfall; or

2. Keep your car and carry on. If you'd like to keep your car but can’t afford to pay the residual at that time, don’t worry. You can enter into a new novation by financing the residual. This novation will cost less than the original one because you will only be financing the residual, not the whole purchase price of the vehicle. 

3. Keep your car and finish. You’d simply pay off the residual and you’re done. You could even sell your car for some extra cash.

Once you’ve decided, a good novated lease provider will handle everything for you, whatever you choose to do.

The bottom line: How a novated lease stacks up

All in, a novated lease is a simple process to set up, and almost certainly the most hassle-free way to have a car if you choose to include all of your running costs in your package. If you buy your car outright or choose to go with a standard car loan, other than the higher costs, there’s a lot more admin and unexpected outlay involved. Of course, these also come out of your post-tax income and therefore there’s no tax savings. And really that’s the clincher: tax savings on a novated lease can be in the tens of thousands of dollars, as illustrated by the table below.