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What is a novated lease, and how might it benefit you?

9 August 2019 AutoMarket, Tips & Advice

While a novated lease might sound like something that only your accountant could get excited about, taking the time to fully understand it could save you a heap of time, money and stress.

First things first: what is a novated lease?

A novated lease is a salary packaging arrangement between you, your employer and a finance company that allows you to bundle not only your car’s repayments but all its regular running costs – petrol, insurance, rego, servicing and the like – into one regular, easy-to-manage payment.

How might a novated lease benefit you?

Taxes are a way of life, and most of us work hard in return for a regular post-tax cash injection.  Unlike a regular car loan, novated lease repayments are partially sourced from your pre-tax salary. This could lower your taxable income, which means less tax — and more take-home pay.  

And because your car’s annual expenses are pre-budgeted for with the help of an expert novated leasing provider, you don’t have to worry about scrounging money for the rego bill or mechanic visit.

A novated lease could benefit anyone: you don't have to be a big earner or drive lots of kilometres. And the car doesn’t have to be a brand new, either — in fact, you could even lease your existing vehicle

How much could it save you?

The amount you could save depends on a variety of individual circumstances, but for an indicative figure check out this handy online calculator.