The short answer to the question is YES the financier will conduct a credit check when you apply for a novated lease.
The bank or finance company is lending money to you against a motor vehicle for an extended period of time from 12 to 60 months and just like a secured car loan or personal loan they will conduct a credit check.
Why is a credit check performed?
The application process is generally one way. You complete an application and then provide evidence of income, identification and a privacy consent. The application process is basically you telling the bank or finance company your financial position and capacity to repay the lease.
A credit check is a way of rounding out the application process. The credit score is an independent way of the bank or finance company forming an opinion on your ability to repay the loan amount.
What if there is a small mark on my credit file?
Generally speaking if there is a small hiccup on your credit file and it has been resolved it will not present as a major issue in your application for a novated lease.
Many common small problems arise from missed payments on utility bills and the like. People move address and bills arrive after they have moved and then remain unpaid or paid well after their due date. Such small and resolved marks on your credit file should not present an issue with your application.
What are banks and finance companies looking for in my application?
Lending criteria generally cover capacity, collateral, character and credit.
Capacity is the assessed ability of you to repay a novated lease given your income, living costs and other financial commitments. Novated lease are treated favourably as the cost of a novated lease is in part paid via an income tax deduction and lower overall repayments due to the structuring of a residual into the lease.
Character is an assessment of your trustworthiness which is evidenced by a truthful application including highlighting any issues in your previous borrowings. A credit check will assist the bank or finance company to cross check what you say with what is recorded on your credit file.
Collateral is the value of the asset (e.g. car you wish to purchase) compared with its market value. The bank or finance company does not wish to lend an excessive amount against a motor vehicle compared with its market value.
Credit is for novated leases your credit score.
There are variations on the above lending criteria depending on if you are a business or individual or if you are borrowing via a secured lending facility or an unsecured one. Overall banks and finance companies are using an holistic approach to assessing applications.
Check out What is Needed for a Novated Lease Application for further information.