Are Novated Leases Worth It in 2025?
If you’ve been wondering whether a novated lease is worth it, the short answer is: for the right person, it can be one of the smartest and most cost-effective ways to get behind the wheel of your next car.
From tax savings to cash flow benefits, novated leasing offers Australians a unique way to package their vehicle costs through their salary but like any financial arrangement, the value you get depends on your personal circumstances. In this guide, we’ll show you:
- How a novated lease works.
- The many advantages it offers.
- Things to plan for so you get the most benefit.
And if you’re still unsure by the end, our team can run the numbers for your exact situation so you can see the savings upfront. Get a personalised tax-saving quote.
What is Novated Lease?
A novated lease is a three-way agreement between you, your employer, and a finance provider. Instead of paying for your car and running costs from your after-tax income, the payments come directly from your pre-tax salary.
This arrangement can:
- Reduce your taxable income (meaning you pay less income tax).
- Save you thousands on GST.
- Wrap all your vehicle running costs into one manageable monthly payment.
It works for new cars, eligible used cars, and electric vehicles (EVs) giving you flexibility to choose the right fit for your lifestyle.
Pros & Cons of a Novated Lease in 2025
Here’s a clear look at the advantages and things to consider:
| Pros | Cons |
| Lower taxable income & GST savings | Lease tied to your job (needs stable employment) |
| Bundled running costs = predictable expenses | Residual payment due at end of lease |
| EV & hybrid FBT exemptions | Less benefit for very low-mileage drivers |
| Access to fleet discounts on cars & servicing | Some fuel cards not accepted everywhere |
| Easy upgrades to newer cars | Not available for the self-employed |
Who Benefits Most from a Novated Lease?
| Best Fit | Why |
| Full-time employees | Consistent income = maximum tax benefits |
| High or moderate mileage drivers | Bigger savings from bundled running costs |
| EV & hybrid buyers | FBT exemption + reduced fuel and maintenance |
| Drivers who like upgrading regularly | Flexibility to change cars every few years |
| People who want predictable expenses | All costs rolled into one payment |
Why a Novated Car Lease Can Be Worth It?
1. Significant Tax Savings
Because lease payments are made from your pre-tax salary, your taxable income drops — meaning you pay less tax. On top of that, you don’t pay GST on the purchase price of the car, which can be a saving of thousands of dollars right away.
Example: A $60,000 car could mean GST savings of around $5,400 before you even factor in ongoing tax benefits.
2. Extra Benefits for EVs & Hybrids
Eligible EVs under the luxury car threshold attract a Fringe Benefits Tax (FBT) exemption, making them even more cost-effective. You’ll save on both your lease and your running costs, and reduce your environmental footprint at the same time. See FBT Exempt Vehicle List in 2025
3. Bundled Running Costs
With a novated lease, your fuel, servicing, registration, insurance, and even tyres can be included in the package. This means:
- No surprise bills.
- Easy budgeting with one regular payment.
- Peace of mind that your car is covered.
4. Fleet Discounts
Your provider can give you access to fleet pricing on cars and servicing that most individuals can’t get on their own. These savings often exceed what you could negotiate privately.
5. Flexibility at Lease End
When your lease ends, you can choose to:
- Upgrade to a new car.
- Keep your current vehicle by paying the residual.
- Return the car and walk away.
6. Works for New, Used, or Your Current Car
A novated lease isn’t just for brand-new cars, you can lease an eligible used vehicle or even your existing car if it meets certain criteria.
7. Easier Vehicle Upgrades
Leasing means you can stay in a newer model with the latest safety features without the hassle of selling privately.
8. Better Cash Flow Management
Because all running costs are spread evenly across the year, you can avoid large, irregular expenses and keep your budget predictable.
Want to know? How to Apply for Novated Lease in Australia?
Things to Plan For Novated Lease (and How We Help)
While novated leasing offers many advantages, it’s important to understand a few considerations so you can plan ahead — and this is where working with the right provider makes a difference.
1. Employment Changes
Novated leases work best with stable employment. If you change jobs, the lease can be transferred — and we help manage this process to minimise delays.
2. Lower Kilometre Drivers
Savings are greatest for moderate to high-mileage drivers. Even so, low-mileage drivers can still benefit from tax savings and bundled costs.
3. Fuel Card Acceptance
Some cheaper fuel stations may not accept certain cards, but reimbursement is straightforward and our team walks you through the process.
4. Residual Value at Lease End
Every lease has an agreed residual value. We help you plan for it from day one so there are no surprises.
FAQS
- Do novated leases save money in 2025?
Yes. Thanks to GST savings and pre-tax salary deductions, many employees save thousands over the life of the lease compared with a car loan or cash purchase.
- Is a novated lease better than a car loan?
For employees, usually yes. Loans are paid from after-tax income, while novated leases use pre-tax dollars and include running costs.
- What happens if I leave my job?
Your lease can be transferred to your new employer. Our team helps manage this transition smoothly.
- Are EVs and hybrids included?
Yes. In fact, eligible EVs under the luxury car tax threshold are exempt from Fringe Benefits Tax (FBT), making them even more cost-effective.
- Can I lease my existing car?
In some cases, yes if the car meets age and value criteria. Check with our team for eligibility.
- What is the residual value?
Every novated lease has a residual (balloon) payment at the end. You can pay it, refinance, or trade in your car to cover it.
Final Verdict: So… Are Novated Leases Worth It?
For many Australians in 2025, the answer is yes. Novated leases offer:
- Tax savings (income + GST).
- Predictable monthly costs.
- Flexibility with vehicle choice and upgrades.
- Extra benefits for EV drivers.
While there are some considerations, like job stability and mileage, these challenges can be easily managed with the right support.
For the right driver, a novated lease delivers genuine savings, convenience, and flexibility that traditional car finance can’t match.
Ultimately, a novated lease is worth it for many, but the best way to know if it’s right for you is through a personalised consultation. Our team can help you navigate the details and ensure you’re making the most cost-effective decision for your situation.
Get Your Personalised Novated Lease Analysis
Before you buy your next car, let’s run the numbers.
We’ll show you exactly how much you could save with no obligation and no hidden catches.
