Getting started with a novated car lease

Novated leasing can be a cost effective and financially rewarding way to run a car.

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How it works

A novated lease is one of the few ways that the Australian Tax Office (ATO) allows an employee to gain a tax advantage. But how easy is it to set up and where do you start? We guide you through the process.

Are you an employer?

Jump to ‘How it works: Getting your employees on a novated car lease’ to see things from your perspective.

Novated lease benefits: A recap

With a novated lease, you can:

Reduce your income tax by using your gross (pre-tax) salary
Avoid paying GST on your car and running expenses
Budget all your vehicle expenses and have them paid from your salary
Access fleet (wholesale) pricing to get a better price on your car

In short, it’s like negatively gearing an investment property, as you can apply pre-tax dollars to the running of your vehicle, which reduces your taxable income and GST payable. Want more detail on the benefits? Read our companion article ‘the benefits of a novated lease’ for an in-depth review.

The parties involved in a novated lease

A novated lease is structured so you assign the payment of your car and operating costs to third parties. There are four parties involved in a novated lease:

You: It’s your lease and you are ultimately responsible for it
Your employer: They pay your car costs on your behalf from your salary
Your novated lease provider: They connect all parties and manage your lease for you
Your financier: They front the money for your car and have a lease agreement directly with you

The process with a novated lease

Do your research: Once you feel you’ve done enough research on novated leasing and you know novated leasing is right for you, think about the car you’d like to put on the novated lease. It can be a used car, an existing car, or a new car. If you’re looking for a new car, think about the budget you have in mind, as we’ll need to know when we prepare your personalised quote.
Get a quote: We’ll do an obligation free quote over the phone with you. We’ll help you set a budget for your vehicle operating costs (fuel, rego, insurance, servicing, maintenance, tyre replacement, roadside assistance) based on your real-life (historical) expenditure. This allows you to get a simple weekly, fortnightly or monthly cost that matches your pay cycle, and is great for budgeting as it’s the same amount every time.
Secure finance: You’ll do a finance pre-approval next, to speed things along if you decide to go ahead.
Sign your lease: Once you’re approved, if you’d like to go ahead, you and your employer sign your lease agreement. Once that’s been processed by the financier, you’re all set.
Get your car: You get your welcome kit, and you pick up your car.

As you can see, it’s easy to get started. You can get an obligation free quote here. Or, if you’re not ready, we can walk you through each step of the process and stay with you throughout your novated leasing journey. If you have any questions, just give us a call on 1300 888 594. Or you can request a callback or send us a message and we’ll message you back.

FAQ

What happens if my running costs are less than what I budgeted for?

If you end up using less than you pay, don’t worry – the amount stays on your account balance and any additional funds left over at the end of your lease will be returned to you. If you’re consistently under-spending on (or over-contributing to) your budget, we can recalculate your budget accordingly.

What’s in my welcome kit?

Your welcome kit includes your cards for fuel and servicing (you use these so you never have to pay out of pocket).

How quickly can I get my car?

Once the finance is in place, you’ll be able to get your car as soon as the dealer (or seller) has it ready for you to collect. Generally this will be within a day or so of signing all lease documents.

What if my employer says no?

If your employer says no because they don’t have enough info, you can share our employer guide with them. Or, if you’d prefer, you can suggest us to your employer – we’re happy to chat to your employer directly and guide them through it.