Compared
Novated lease vs a car loan
The core difference is simple: a novated lease comes out of your salary before tax and bundles the running costs in, while a car loan is paid from your take-home pay after tax. That one difference is where most of the saving comes from.
Pre-tax versus post-tax
With a car loan you earn your salary, pay income tax on all of it, and then pay the loan from what is left. With a novated lease, part of the cost comes out before tax is calculated, so your taxable income drops.
Where a novated lease wins
- Paid from pre-tax salary, lowering your taxable income
- You save the GST on the purchase price
- An eligible EV is FBT exempt, which a loan cannot match
- Fuel or charging, insurance, rego, servicing and tyres are bundled into one payment
Where a car loan can suit
A loan can make sense if your employer does not offer salary packaging, if your taxable income is very low, or if you want to own the car outright with no residual at the end. We would rather you knew that than signed up regardless.
The honest comparison
The only way to compare them properly is on your numbers. The calculator shows the novated-lease weekly cost with every fee and the true effective rate, so you can hold it against a loan quote and decide with eyes open.