Just like with a regular car loan, you get full use of the car - you drive it, fuel it, service it, and look after it as if it were your own. There are no restrictions on whether you use it for work or personal purposes. The main difference is that the lease payments are made through salary sacrifice, which may offer tax benefits compared to a standard car loan.

While the financier is the legal owner during the lease term (again, similar to a regular car loan), the vehicle is registered in your name and you have the same flexibility and responsibility as if you owned the vehicle. At the end of the lease, you can pay the residual (similar to a balloon payment) and take ownership, refinance, or upgrade to a new car.

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.

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.

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.

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.

A novated lease may provide tax savings because part of your vehicle costs are paid from your pre-tax salary, which can reduce your taxable income. In addition, vehicle running costs like fuel, registration, insurance, servicing, and tyres can often be included in the lease and packaged in a tax-effective way.

Generally, you don’t pay GST on the cost of a new car with a novated lease. The leasing arrangement allows GST on the purchase price to be claimed back (up to the current luxury car tax limit).

You also usually don’t pay GST on running costs that are included in your lease (like fuel, servicing, tyres, insurance, and registration), as the GST is claimed and passed on to you through the 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.

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. 

If you submit an enquiry, we may be able to tell you whether your company offers novated leasing. Otherwise, the best way is to check with your HR or payroll team — we're happy to help you check. Some employers promote novated leasing through staff intranet, onboarding packs, or employee benefits programs, while others only set it up when employees ask.

If your company doesn’t currently offer it, we may be able to work with your employer to put an arrangement in place

Salary sacrificing a car through a novated lease can be suitable for business owners only if they are employed and receiving a salary through their own company (e.g. via a Pty Ltd structure). This can be setup at the commencement of the new novated lease too.

Sole traders are not eligible for a novated lease, as they are not considered employees and do not receive a salary in the traditional sense.

If you're planning to leave your current employment to start your own business, you may be able to transfer your novated lease only if you structure the business in a way that allows you to pay yourself a regular salary.

If you’re self-employed and not receiving a salary—such as operating as a sole trader—you’ll need to consider alternative vehicle finance options. It is possible for sole traders to become a PTY LTD, seek your financial advisor about this.