Novated Lease Australia Guide

Getting a novated lease with bad credit

How much is the car you wish to novate?

It can still be possible to get a novated lease with bad credit

Having bad credit does not automatically rule you out from getting a novated lease, depending on how serious the issues in your credit file are. 

Unlike other forms of finance, the payments on a novated lease are deducted from your salary by your employer. This arrangement is generally less risky for finance companies, as it’s unlikely any payments will be missed while the customer is employed.

A credit check is also just one part of the novated lease application process. There are other factors that contribute towards the finance provider’s decision, such as:

  • Your income
  • How long you have been employed in your role
  • How long you have worked in your industry
  • Whether you own any assets (e.g. your own home)
  • The cost and age of the vehicle you want to lease

Novated Lease Australia works with a range of Australian finance providers and our consultants know their approval criteria inside out. We generally have a very good idea of which option is most likely to be suitable based on a customer’s credit history, including those with bad credit.

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Does the type of bad credit impact a novated lease application?

Yes, novated lease finance providers will look at the specifics in your credit history when deciding whether to approve your application.

Generally speaking, low-value non-financial defaults (e.g. an unpaid electricity bill) that have since been repaid are less of an issue than financial defaults (e.g. a missed loan repayment).

If there are more serious issues in your credit history (e.g. a non-discharged bankruptcy, a debt agreement or unpaid financial defaults), it’s unlikely you will be approved for a novated lease.

Bad credit novated lease

Does a bad credit novated lease come with a higher interest rate?

If you are applying with bad credit, chances are the interest rate on your novated lease will be higher, compared to a customer with a good credit rating.

However, the same is true of other finance options. In other words, you will often still be in a better position with a bad credit novated lease compared to a car loan.

Beyond the interest rate, the other aspects of a how a novated lease works are no different whether or not you have bad credit. There are no additional fees, and the tax savings and other novated lease benefits are the same.

Is there anything I can do to help get my application approved?

Here are some general tips we often suggest to customers who have issues in their credit history:

  • Check your own credit score and report so you know exactly what’s in it (e.g. what's causing a low credit score).
  • If there are any errors, speak to the credit provider or credit reporting agency to have them fixed.
  • If there are unpaid defaults, pay them off if possible.
  • If you can, wait until enough time has passed for negative information to come off your credit record before applying for a novated lease.
  • If you recently started a new job, wait until you have at least passed your probation period before applying as this is a positive signal for finance providers.
  • Consider a self-managed novated lease if your employer has a preferred novated lease provider you must use. A self-managed lease may give you more flexibility to compare a wider range of finance providers.
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Written by

Bevan Guest - NLA CEO


Bevan Guest

Reviewed by

Sean Callery Editor Novated Lease Australia


Sean Callery
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