10 Benefits of a Novated Lease Every Employee Should Know
Introduction
If you are an employee or company director who pays yourself a salary, a novated lease can be one of the smartest ways to finance your next car. It is not only about convenience but also about better tax management, cost control, and the joy of driving a newer car without financial stress.
Below are ten key benefits that make novated leasing an attractive option for Australian workers who want smarter vehicle ownership.
1. Pay from Pre-Tax Income and Reduce Taxable Salary
One of the biggest advantages of novated leasing is that your car payments come directly from your pre-tax income. This reduces your taxable salary, meaning you pay less income tax overall. The Australian Taxation Office recognises novated leasing as a legitimate salary packaging arrangement, which is why so many employers offer it.
You can read more about salary packaging and Fringe Benefits Tax (FBT) details on the ATO website (https://www.ato.gov.au/General/Fringe-benefits-tax-(FBT)/).
2. Drive a New Car Sooner Without a Huge Upfront Payment
With a novated lease, there is no need for a large deposit. You can start driving a new or used car with minimal upfront cost. This makes it easier to upgrade your vehicle more often and avoid the long wait that usually comes with saving for a traditional car loan deposit.
3. Bundle All Vehicle Costs into One Simple Payment
A novated lease combines all major car expenses, such as repayments, fuel, insurance, servicing, tyres, and registration, into a single fixed payment deducted automatically from your salary. This helps you avoid financial surprises and keeps your car budget consistent every month.
You can explore how One Car Group simplifies this process on their Novated Leasing page (https://onecargroup.com.au/novated-leasing/).
4. Save on the Goods and Services Tax (GST)
Because your leasing provider purchases the vehicle on your behalf, GST is generally claimed upfront by them. You effectively pay the ex-GST price for the car and ongoing running costs, creating another layer of savings.
5. Enjoy Flexible Vehicle Choices
Novated leasing does not limit you to one specific brand or type of car. You can lease new or used vehicles that suit your lifestyle and budget. Whether you want a fuel-efficient commuter car, a family SUV, or an electric vehicle, One Car Group can tailor the lease to your preference.
6. Simplify Your Record-Keeping
Managing car expenses for tax purposes can be time-consuming. With a novated lease, everything is consolidated into one account, so you no longer need to keep fuel receipts or separate invoices. The leasing provider handles the record-keeping for you, making tax time easier.
7. Access Electric Vehicle Fringe Benefits Tax (FBT) Exemption
Employees who choose an eligible electric vehicle can enjoy a full FBT exemption under current Australian law, as long as the car’s value is below the Luxury Car Tax threshold for fuel-efficient vehicles. This means substantial savings when you go electric through a novated lease.
Learn more about Electric Vehicle novated leases (https://onecargroup.com.au/electric-vehicles/) and how they can reduce your costs while supporting sustainability.
8. Keep Your Car Even If You Change Jobs
If you move to a new employer, your novated lease can usually be transferred to your new company. If that is not possible, you can continue making the lease payments directly. This flexibility means your lease moves with you instead of being tied to your current employer.
9. Access Competitive Fleet Discounts
Leasing providers like One Car Group often purchase vehicles in bulk, giving you access to competitive fleet pricing that would not be available if you were buying the car on your own. These discounts can reduce your overall vehicle cost and improve your lease value.
10. Maintain a Predictable and Stress-Free Car Budget
Every car owner knows that maintenance or registration costs can appear at the worst possible time. With a novated lease, these costs are included in your regular payment, so there are no sudden expenses or cash flow surprises. You know exactly what your car will cost each month, making it easier to plan ahead.
Frequently Asked Questions
Q1: Can I choose any car for a novated lease?
Yes. You can choose almost any new or used vehicle, subject to the lease provider’s conditions and your employer’s policy.
Q2: Does a novated lease affect my ability to get other loans?
Like any finance agreement, it appears on your credit report, but it does not automatically reduce your borrowing power if you maintain timely payments.
Q3: Can I include my existing car in a novated lease?
In some cases, yes. One Car Group can assess whether your current vehicle qualifies for a lease arrangement.
Q4: What happens at the end of the lease term?
You can pay the residual value and own the car, start a new lease with an upgraded vehicle, or return the car depending on your preference.
Q5: Can I salary package an electric vehicle under a novated lease?
Yes. In fact, electric novated leases are currently one of the most tax-effective ways to drive an EV in Australia.
Conclusion
A novated lease gives employees the chance to enjoy a new car with less tax, fewer costs, and more freedom. It combines financial efficiency with convenience, helping you manage your car expenses effortlessly.
To explore your options and calculate your potential savings, contact One Car Group Contac Us today and find out how novated leasing can work for you.
