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After receiving this, you'll see why more and more Australians are choosing to novate their next cars.
What is a novated lease?
A novated lease is the most cost-effective way to acquire and run a car.
It's a three way agreement between you, your employer and Novated Lease Australia.
A novated lease is an automated discount on your new car - you do not have to pay the GST on the purchase price of the car, instantly saving you thousands of dollars.
You can also include all of the running costs of the car, including fuel, registration, maintenance and insurance. This further increases the huge savings you can make with a novated lease.
How does a novated lease work?
Just like other forms of car finance, there are typically a number of payments over a fixed term, with a residual (or balloon) payment due at the end of the lease. Each party to the agreement – employer, employee, and financier – will play a specific role.
The employer
Agrees to make regular, automated payroll deductions from the employee’s pre-tax salary. Our expert team helps set everything up.
The employee
Agrees to pre-tax salary deductions, in exchange for the use of the vehicle. The vehicle can be used for business or entirely for personal use.
The financier
Procures the vehicle, establishes the lease and manages the administrative, contractual and compliance aspects of the transaction.
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Huge extra EV savings
You can now buy and run an eligible electric vehicle (up to the luxury car tax threshold) through a novated lease and be exempt from fringe benefits tax (FBT).
This supersizes the already considerable savings.
The example shown is the cost of buying and running a Tesla Model 3 RWD over 5 years, compared to using traditional car finance and buying the car outright using cash. (The calculation is based on a driver in NSW with $120,000 pre-tax salary, 15,000km driven annually and car loan interest rate of 7.5% p.a.)
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Thanks to the major fringe benefits tax incentive, EVs and PHEVs are in high demand. Here are some the most popular eligible vehicles below the luxury car tax threshold.
- Tesla – by far Australia's best-selling EV brand, specifically the Model 3 and Model Y
- BYD – in particular the Atto 3, the Dolphin and the Seal
- MG – the HS +EV and ZS are among the most affordable EVs on the road
- KIA – the EV6 is popular as is the Sorento PHEV
- Hyundai – the Kona, and Ioniq 5 are in high demand
- Mitsubishi – the Outlander PHEV 5+2 seater is a family favourite
- Volvo – notably the XC40 and C40 Recharge.
- BMW – the iX1's pricing makes it eligible to be FBT-exempt
- Polestar – A growing brand, particularly the Polestar 2
Press go
on that new EV
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We also help customers every day with fantastic deals and major tax savings on Australia's best-selling non-EVs.
- Ford – the Ranger and Everest are always popular
- Mazda – in particular the BT-50 (eligible variants) plus SUVs like the CX-9
- Toyota – we regularly eligible models novate Landcruisers and HiLuxs (eligible variants)
- Nissan – in particular the Patrol and Navara
- KIA – the family-friendly Carnival, plus the Cerato in hatch and sedan
- Hyundai – the Tucson and i30 are drivers' favourites
- Mitsubishi – Australians still love the Pajero and the ever-reliable Triton
- BMW – the X1 is among the most popular high-end SUVs
- Volkswagen – of the European cars on Aussie roads, the Amarok and Tiguan are firm favourites
- Isuzu – there's never a shortage of enquiries for the D-MAX (eligible variants) and the MU-X
Novate
a bestseller
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Quick-fire novated lease questions
Learn more about how a novated lease works from start to finish. Our expert consultants can also answer any questions, so you can sign up with confidence.
Find my best deal
Is there a minimum salary to get a novated lease?
Novated leasing approval is dependent on your capacity as a borrower much like traditional finance. This means you need to illustrate your ability to meet regular repayments over the term of the lease.
For example, as it is entirely dependent on your personal living situation, expenses and dependents, you could gain approval for a $30,000 vehicle on a yearly salary of $45,000.
How long will my novated lease be?
The term of the lease agreement is flexible, to suit the employee.
Generally, terms of one to five years are available under a novated lease. You can compare your payments based on different lease terms using our novated lease calculator.
The shorter the term of the salary packaging agreement, the higher the residual.
What's the minimum and maximum value of car I can get?
The amount you can borrow for a vehicle will vary depending on the lender. In general, the minimum novated lease amount is between $5,000 and $10,000, while higher amounts are subject entirely to the repayment capacity of the applicant.
Novated lease agreements may exceed $100,000 but very rarely exceed $150,000.
Get expert answers to more of the common questions in our novated lease explained guide.
Can you help me get a novated lease anywhere in Australia?
Can I buy a used car with a novated lease?
Yes, right now, people more than ever are getting used cars through a novated lease instead of waiting for a new car deal. Buying a used car from a dealership will still see you save the GST on the purchase price.
Can I get a novated lease if I work for my own company?
Salary sacrificing a car through a novated lease can be suitable for a business owner who is also an employee of their own company, but it’s only an option if the business owner is receiving a salary from the company they own.
If you are planning to leave your current employment to start your own business, you can transfer your novated lease, provided you are paying yourself a salary.
If you are self-employed – i.e. are not paid a salary or paying yourself a salary through your own company – you will need to look at alternative forms of vehicle finance.
What happens at the end of a novated lease?
You have a few options available at the end of your novated lease term:
- Pay the residual amount (including GST) at the end of the lease term to own the car outright.
- Sell the car (either privately or through a dealer) and if the sale price is higher than the residual amount owing, you get to keep the profit tax free.
- If you want to keep the same car and continue enjoying the tax savings, we can help you to refinance the residual amount for another term.
What happens if I leave my current job during a novated lease?
If you leave your job during the term of your novated lease, or are fired from your position by the employer, you will still be responsible for making payments on the vehicle.
The lease will be de-novated, where the running costs are removed from the agreement and repayments work much the same way as a standard car loan.
Get the best deal on a novated lease
Find my best dealThe most popular cars being novated right now
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Novated lease guides
Need more information? Read our easy-to-understand novated lease guides.
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