When a novated lease is worth it
A novated lease pays for your car and its running costs from your pre-tax salary, and you save the GST on the purchase price. That is real money.
- You pay income tax, and your employer offers salary packaging (most large ones do)
- You want an electric car under $91,661, which is FBT exempt and the strongest case of all
- You will actually drive it and keep it for the lease term
When it might not stack up
It is not automatic. A novated lease can be the wrong call if your taxable income is low (less tax to save), if you buy a petrol car and drive very few kilometres, or if you are likely to end the lease early. We will tell you that rather than push a deal that does not suit you.
An honest note: FBT exempt means no fringe benefits tax is payable, but the benefit is still reported on your income statement. That reported amount can affect income-tested things like HECS or HELP repayments, the Medicare levy surcharge, and family payments. Our calculator and team will always show you the full picture.
How to know for sure
Do not guess from a national average. Put your real numbers into the calculator: it shows your weekly cost, exactly what you save, and every fee, including the true interest rate. If it is not worth it for you, you will see that too.
Common questions
Do you actually save money on a novated lease?
Usually yes, through the pre-tax salary deduction and the GST saving on the car. The size of the saving depends on your income, the car and your running costs. The calculator shows your real figure.
What is the catch with a novated lease?
The honest ones: there is a residual (balloon) owing at the end, the benefit is reported on your income statement even when FBT exempt, and ending a lease early can cost you. We show all of this up front rather than in the fine print.
Is a novated lease worth it on a lower income?
It can be, but the saving is smaller because you pay less tax to begin with. It is worth running your own numbers before deciding. The calculator does that in a minute.