About Novated leasing

Novated leasing is a kind of car finance that is quite unique, and Australia is one of the few places where it is used. It enables salaried employees to own and drive cars while their employers cover the lease obligations. Thus, it is a three-way contract that involves the employee, the finance company, and the employee. We can help you find lenders who offer this form of finance.

Novated leasing is a salary packaging arrangement that involves three people instead of the regular two-way agreement between the lender and the borrower. In a novated leasing, the finance company, the person seeking the finance, and their employer are involved. Through novated leasing, the person seeking finance does not just have access to car finance, but they can also include the car’s running costs, such as the cost of fuel, insurance, servicing, etc., in one package that you can make payments for. A novated lease is very beneficial as it allows you to get the car you want and cover all the costs associated; it is available for all kinds of cars, whether new, used, or an existing car.

With this kind of agreement, the employer will bear part or all the obligations in the agreement. When you use this car finance arrangement, the employer will be responsible for payment of the lease and other obligations in line with the agreement, while the employee will use the car in accordance with the terms of the agreement. In exchange for these payments, the employer will reduce the salary of the employee proportionate to the total cost of the lease. Such a reduction in salary will generally mean less income tax which is expected to benefit the employee financially.

Although the obligations in the agreement are transferred to the employer, you, as the employee and the person benefiting from the finance deal, still have the ultimate responsibility. Thus, if the employer fails to make any payment on the lease, you are expected to make the payments. The same goes for when you take an unpaid vacation.

The validity of a novation deed sustains as long as the person remains employed to the employer, and should the person cease to be employed, the agreement is immediately cancelled, and the obligations that the employer has agreed to bear under the agreement becomes that of the employee again. In this case, a new agreement can be entered into in which a new employer takes up the obligation. The obligations end with the end of the lease.

Which Vehicles Can You Get with Novation Lease

There are restrictions when using a novation lease to get the car you want. It is mostly available for cars that are below the threshold for luxury car tax in value. This amount generally changes each year as the Australian Tax Office reviews it. The value of the car includes the value of accessories, attachments, or parts imported at the same time or supplied with the car. Once the car is not above this threshold, you can easily get it.

What makes novation lease quite favourable is how comprehensive it is when it comes to covering your obligation in relation to car ownership and use. It covers;


The car you are buying itself is fundamental to the novated lease, and it is important that you select a car that matches your needs. You have multiple options when it comes to cars as you can pick either new or used cars.

Repairs and Maintenance

Car servicing costs will generally be included in the agreement. This means that all the servicing on the vehicle for the time you are using it will be charged to the lender’s account, and the employer will bear the obligation.


The novated lease can also cover the cost of fuel when using the car. Usually, the finance company will issue you a fuel card that you can use anywhere to get fuel, and the payments for the fuel will generally be included in your finance deal.


Generally, your novated lease agreement will also include the cost of replacement parts for your vehicle accessories. Commonly included accessories are batteries, tyres, and windscreen.

Comprehensive insurance

Your car insurance is essential, and the novated leasing agreement also covers it. With this, you don’t need to go looking for insurance again because the finance company will offer you the ideal insurance policy for your car.


The initial car registrations and renewals are also included in the payment, which means you don’t have to pay for anything whatsoever. The cost will be paid through the agreement, and you don’t have to start looking for money to cover these costs each time they expire.

Roadside Assistance

Another thing you will get with a novated leasing agreement is complimentary roadside assistance. While it is not all finance companies that provide this benefit, most will do so in a situation where the duration of the lease surpasses that of the car manufacturer’s Roadside Assistance.

With all these things covered by a novated lease, you have absolutely nothing to worry about. It is available for any salaried worker regardless of their conditions. Whether you are covering thousands of kilometres or just hundreds, whether you want used cars or new ones, whether you receive high wages or low wages, you can get novated leasing. In some cases, it even comes with options to buy the car for the residual value at the end of the lease. So you are basically winning on all fronts when you get novated leasing. All you have to do is maintain your employment.