What is a novated lease?
Novated leasing is a type of salary packaging arrangement in Australia that allows employees to finance a car using a combination of their pre-tax and post-tax salary. It involves an agreement between the employee, their employer, and a leasing company.
The employer makes lease payments on behalf of the employee using pre-tax earnings, which can reduce taxable income and provide potential tax benefits, including GST savings on the vehicle purchase price and running costs.
Novated leasing can be a cost-effective way to own and maintain a car while taking advantage of tax efficiencies.
How does a novated lease save me money?
As payments come from your pre-tax salary, you can benefit from tax savings and avoid paying GST on the purchase price of the car, which can lower costs by up to 10%.
Additionally, because expenses are bundled into a fixed payment, budgeting becomes easier, and you may get fleet discounts on servicing and running costs.
What is the difference between a novated lease and a regular loan?
A novated lease is paid out of your pre-tax salary, making it potentially more convenient than a regular car loan. Learn more about the difference between a novated lease and a car loan here.
Is a novated lease worth it?
Tax Benefits
Payments are deducted from your pre-tax salary, reducing taxable income and avoiding GST on the purchase.
Lower Costs
Typically lower monthly payments and minimal upfront expenses on a salary sacrifice car loan.
Easy Management
Your employer handles payments, reducing the risk of missed payments or defaults on a salary packaging car loan.
Better Car for Less
Access to higher-quality or more expensive vehicle at a lower cost.
Warranty Coverage
All vehicles come with a warranty, offering potential savings on future repairs.
Potential for Upgrade
At the end of the salary sacrifice vehicle lease term, you may have the option to upgrade to a new, refinance, or buy the car outright.
Learn more about what happens at the end of your lease here.
Am I eligible for a novated lease?
Typically you may be eligible for a novated lease if you meet the criteria below:
- Employment: Permanent full-time/part-time job with an employer that offers salary packaging.
- Income & Credit: Sufficient income, good credit score, and financial stability.
- Eligible Vehicle: Must meet lender requirements (age, price, usage).
- Residency: Usually for Australian citizens or permanent residents.
How it works
Using a broker for your finance needs allows you to compare lenders and find a product that suits your circumstance. Reach out to the team to find out we can guide you through the process.


Try our tools
We understand that getting finance can be a scary thought, which is why we have a raft of tools to help you navigate the novated lease landscape – or, simply reach out to the team at Positive Lending Solutions.
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