What is Novated Car Lease?

A novated car lease is a smart way for employees to finance a vehicle using their pre-tax income, creating significant tax savings while keeping repayments simple and manageable.

This three-way agreement involves the employee, their employer, and a financier. The employee selects a vehicle, and the financier provides the lease. The employer then makes the lease repayments on behalf of the employee by deducting them directly from their pre-tax salary.

By using pre-tax income, you reduce your taxable income—helping you save money while enjoying the use of your car.

How Does a Novated Lease Work?

Here’s the typical process:

  • Choose your car – Select a new or used vehicle that suits your needs.
  • Set up the lease – A financier purchases the vehicle and establishes a lease agreement.
  • Salary sacrifice – Your employer deducts the lease payments from your pre-tax salary and pays them to the financier.
  • Drive away and save – You enjoy your car while benefiting from reduced taxable income.

Lease terms usually range from 1 to 5 years, with repayments scheduled weekly, fortnightly, or monthly—providing flexibility to suit your financial situation.

For detailed tax information, visit the Australian Tax Office’s guide on novated leases.

Benefits of a Novated Lease

Tax-effective vehicle financing

Reduce your taxable income by making repayments from your pre-tax salary.

No deposit required

Get on the road without a large upfront payment.

Simple budgeting

Fixed repayments make managing your finances easier.

Employer benefits

Employers can provide an attractive employee benefit without owning or managing a vehicle themselves.

Flexibility

Keep your car and transfer the lease even if you change jobs.

Fixed Interest Rates for Stability

At Natloans, our novated leases feature fixed interest rates. 

This means your repayments stay the same for the life of the lease, giving you greater certainty and making it easier to plan your budget.

Fees and Charges

When setting up a novated lease, some fees apply:

Establishment fee

Paid upfront when signing finance documents (includes GST).

Cash booklet fee

A standard fee associated with the lease agreement (includes GST).

GST on repayments

Monthly repayments include GST but they may be tax-deductible.

Note: Establishment fees cannot be included in the finance amount and must be paid when the lease is set up.

Why Use Natloans for Your Novated Lease?

Arranging a novated lease can be complex. At Natloans, we make it simple:

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We provide flexible solutions and competitive rates by partnering with a diverse range of banks and non-bank lenders.
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Frequently Asked Questions (FAQ)

Can I choose any car for a novated lease?
Yes. Most new and used vehicles are eligible, giving you flexibility in your choice.
You can take the car and the lease with you, transferring it to your new employer.
Yes. Payments are made from your pre-tax salary, reducing your taxable income and saving you money.
Once the vehicle is selected and documents are signed, you can typically be on the road within a few days.