What Is A Secured Car Loan: Everything You Need to Know

Considering a secured car loan? Our detailed guide explains how secured car loans work and offers tips for how to find the best loan product for your needs.

Looking for extra funds to get behind the wheel of a new car? You may have come across a range of options in your research, including a secured and unsecured car loan from a lender. But what are the main differences?

What is a secured car loan?

As the name suggests, a secured car loan is offered when a bank or lender has security over the asset it is providing a loan for. In this case, the car. If for whatever reason you were unable to repay the loan, the lender would be able to resell your vehicle to recoup the money it loaned you. 

There are several key reasons why secured car loans are popular with customers looking to obtain finance on a new car, which we’ll look at in the following sections. 

How secured car loans differ from unsecured car loans

Ultimately, the difference between secured and unsecured car loans is whether the bank or lender has security over the car you’re financing.  With an unsecured car loan, the lender has no security over the vehicle, and no straightforward way to recover its costs if you cannot make the repayments, which means that it will usually offer lower borrowing limits, higher interest rates, and shorter loan-repayment terms. 

Choose a secured car loan if you’re looking to borrow a higher amount, and would like to pay the loan off over an extended period of time. Because your vehicle would be used as security against the loan, lenders may be more lenient on borrowers with lower credit scores, and who have found getting loan approval tough elsewhere.

women happy driving car
puppy in car window

Advantages of secured car loans

In a word: savings! The main benefit of a secured car loan for you is the ability to borrow higher amounts, and potentially lower interest rates on repayments. Because the bank or lender has security over the vehicle, it may also offer longer repayment terms than with an unsecured car loan.  

What are the risks of Secured Car Loans?

he obvious risk to secured car loans is the potential for your vehicle to be repossessed should you not be able to make the loan repayments. However, some other aspects of the loan you need to be aware of are that you need to have full insurance on the vehicle and, depending on the loan repayments, you may end up owing more than what the vehicle is worth at the end of the loan if you opt to make a final balloon payment. 

The vehicle’s value at the end of the loan term is dependent on several factors, including its condition and residual value – which is determined by the type of vehicle and its brand reputation, its popularity in the market, and how many examples of the car for sale at the time.

men typing in calculator

Eligibility criteria for secured car loans

Like any loan or financial product, lenders have an eligibility criteria you must meet in order to access finance for a new car. 
To be approved for a loan with Metro Finance, you need to meet the following eligibility criteria:

01 /

Maximum age of vehicle is 15 years at end of term

02 /

Learner, P1, P2 and Full licence holders

03 /

Australian Citizens and Permanent Residents

To find out more about secured car loans offered by Metro, check out https://metrofin.com.au/personal-finance/car-loans/

men smiling while working

How to apply for 
a secured car loan

Think you meet the eligibility criteria and keen to get the ball rolling on your new car purchase? Getting started couldn’t be simpler!

Get in touch with your finance broker, bank lender or Metro broker and they’ll handle the rest. Bear in mind, your broker may ask a range of questions about you, your financial situation and the type of vehicle you’re looking for – they may also ask you to provide a documents to verify your answers and establish your suitability for a loan. 

Top tip: Ask lots of questions and don’t be afraid to get a second opinion. It’s also a good idea to discuss any purchases or potential financial arrangements with your accountant first. A Metro broker will be able to guide you through this process, and can support you throughout your finance application – to talk to a Metro broker, click on the ‘Talk to a broker’ button at the top of the page, or click here.

Secured car loan repayment option

There is no one-size-fits-all solution when it comes to secured car loans, as they are tailored to suit you and your needs specifically. However, there are some common elements and options that feature as part of a secured car loan:

01 /

This is paid on top of the purchase amount and forms part of your monthly repayments. Make sure to shop around to get the best rate.

02 /

Some car loans may have penalties if you choose to pay off the loan early, so make sure your check and understand these penalties are, if any, before accepting a loan offer.

03 /

This is a lump sum payable at the end of the loan, which is a way of reducing your monthly loan repayments. At the end of the loan, you can opt to pay the full balloon payment, or apply to further finance the amount. 

To find out more about balloon repayments, head to https://metrofin.com.au/news/what-is-balloon-payment-car-loan/

04 /

Loans often attract a number of fees from lenders, and can differ depending on the car loan product. Some fees your secured car loan might include are:


  • Application fees: These are charges for processing your car loan application.
  • Origination fees: This fee covers the administrative costs of setting up your car loan.
  • Documentation fees: These fees are associated with preparing and processing any car loan documents that are required.
  • Title and registration fees: These fees cover the cost of transferring the vehicle’s title and registering it in your name.
  • Late payment fees: If you fail to make your loan payments on time, you may be subject to late payment fees.

Remember, it’s important to review and understand all terms and conditions for your loan, and any fees associated with it

Tips for choosing the right secured car loans

While the prospect of getting behind the wheel of a new vehicle is exciting, it’s important to do your homework. 

Consider the options and the type of loan features that work best for you in terms of the length of the loan, interest rates, fees and whether you’d like to make a final balloon payment. Based on the purchase price of the car you’re interested in and how quickly you’d like to pay off a loan, you may be eligible for an unsecured loan with no collateral on the vehicle, as opposed to a secured loan that uses the vehicle as security. 

family inside car with dog

The biggest thing to consider is your own financial situation, as your loan options will largely depend on your ability to make loan repayments and your credit score. 

Some effective ways of improving your credit score might include setting up automatic bill payments to ensure you don’t miss them and reducing the amount you owe. 

Talk to your accountant or financial adviser about ways to improve your financial situation if it’s a concern to you. To find out more about the kinds of loans offered by Metro, check out: https://metrofin.com.au/personal-finance/

While there are lots of options available when it comes to financing your new vehicle purchase, secured loans are a great way to get the car you want with a range of flexible options designed to save you money in monthly repayments. 

By understanding the differences between secured and unsecured car loans, and some of the main options available to you, you can find a tailor-made option that suits you and your budget. 
Remember, it’s always best to first talk to your accountant and broker about the best solution for your needs, and if you’re still unsure, don’t be afraid to get another opinion.

Secured Car Loans - Frequently Asked Questions

Can I used a secured car loan to purchase both new and used vehicles?

Yes.  There are many loan options available for both new and used cars. Talk to your own broker or a Metro broker about loan options that might be right for you.

With a secured car loan, the asset itself is used to secure the loan.

If your loan will be used predominantly for business, you may be better choosing a Commercial or Novated product.

Metro’s Commercial loans are the best car loans for businesses, providing flexible terms and features to support your commercial vehicle finance requirements. Novated car loans enable employees to finance their vehicles through salary packaging arrangements through their employer.

To find out more about Metro’s business finance products, check out https://metrofin.com.au/business/

While nobody can predict the future, it’s a good idea to understand the terms of a loan before entering into one, and be confident that you can meet the minimum repayment requirements. 

Many lenders also offer support during financial hardship – talk to them if you’re experiencing any difficulties in making loan repayments.

If you’re unsure whether you’ll be able to continue to make repayments for the length of the loan, it’s best to check with your accountant and broker to see if a loan is the right solution for you. 

ENDS

How Asset Finance Works: Step-by-Step Guide

Discover how asset finance works and how businesses can use it to acquire essential equipment and vehicles.

Learn about financing options, benefits, and key steps.

When running a business, the old saying is true: time is money. In order to meet its market demands, both in terms of product and services, businesses need to be agile to seize new opportunities, tackle challenges head-on and look for ways to innovate.

In many instances, a business’s assets – it’s tools of trade – are essential in maintaining its service offering in order to generate revenue. 

That’s where asset finance can help. Regardless of industry, asset finance products can support businesses with fast access to funds so that can acquire a range of high-value assets – like vehicles and new equipment – when they need it most. 

In this blog we’ll take a deep dive into the types of asset finance products available, and what businesses can use them to purchase. 

iStock-1129810557

What is Asset Finance?

In a nutshell, tertiary asset finance products are designed to help businesses acquire high-value items they need. 

Businesses use asset finance as a cost-effective way to get business-essential tools and items when needed, without the hefty outlay of an up-front purchase. Some of the assets businesses may choose to finance include vehicles, heavy machinery and tools of trade like specialist industrial equipment.

Key Benefits of Asset Finance

Aside from the immediate cost savings often attributed to sustainable assets, there are several other key advantages when it comes to financing green equipment, including:

01 /

Regular loan or lease payments are made over time, as opposed to one lump sum.

02 /

Businesses can use finance products to get assets they may not have the liquidity to purchase outright.

03 /

Like many financial products for business assets, businesses may be able to benefit from a range of tax advantages, such as claiming asset depreciation and any interest accrued on the loan.

04 /

Because asset finance products are tailored to suit each individual business’s needs and the kind of assets they require, there is great flexibility in options both in terms of the type of finance available, and how a payment schedule is structured.

How Asset Finance Works – Step by Step

Asset finance is a way for businesses to acquire necessary equipment, vehicles and machinery without large, and often unfeasible, upfront costs.

01 /

As with any financial decision whether it’s business or personal, it’s important to always do your homework. Some things to check before applying for asset finance include:  

  • Your business status (does it have a valid Australian Business Number (ABN)?
  • Whether your business is registered for GST
  • What you intend to use the asset/s for – i.e. is it mainly for business use?
  • What products and offers available to your business

02 /

Once you’ve worked out what you need and what asset finance product is right for your business, it’s time to talk to the experts. At Metro, we use brokers to support our customers. A Metro broker can explain the range of products we have available and take you through every step of the application process.
To find out more or talk to one of our award-winning brokers, click here

03 /

Once you’ve received an asset finance offer from Metro or another financier, it’s time to sign the loan or lease agreement based on the terms and price you’ve discussed with your broker. Once completed and a final invoice for the purchase of the asset is provided to the financier, it’s time to collect your asset and put it to work!

Types of Asset Finance Available

As we’ve mentioned, there are a number of different assent finance options available to businesses, each with their own benefits and payment structures. At Metro, the two main asset finance products we offer are commercial finance agreements, and finance leasing. 

Some features that differ between loans and leases typically comes down to who has ownership over the asset. In the case of a loan, it is usually the business that retains ownership after all repayments and all final balloon payments have been made; whereas with a lease the asset is owned by the financier.

Commercial Finance Agreements Product Features:

  • Loan value available from $10,000 to $1M
  • Loan terms ranging from 2 to 5 years
  • No annual or account keeping fees
  • Competitive fixed interest rates

Choose this tertiary equipment finance product if you are looking for a straightforward and cost-effective financing solution.

Finance Lease Product Features:

  • Loan terms ranging from 2 to 5 years for business purposes only
  • Loans from $10,000 to 1M
  • No annual or account keeping fees
  • Repayments by monthly direct debit
  • Potential tax benefits

Choose this tertiary asset finance product if you need to keep your equipment up to date whilst potentially freeing up capital.

iStock-2211719865 1

Who is Asset Finance Suitable For?

Asset finance is designed for businesses of all shapes and sizes and is really only limited to the type of assets they require. Because the asset itself is often used to secure the loan, meaning that no other form of security is required to obtain funding, it can be a great solution for both small businesses and larger enterprises. 

Sectors that require vehicles, equipment and the latest tools-of-trade, such as construction, transport, agriculture and healthcare industries, regularly use asset finance products to keep their businesses running.

Commercial Asset Finance vs. Personal Asset Finance

As the names suggest, the biggest differences between commercial asset finance vs personal asset finance is that one is for businesses, while the other is for individuals. 

Personal asset finance is primarily offered to individuals for vehicles and, in the case of Metro Finance’s MetroEco product, also extends to vehicle chargers and solar technology, whereas commercial asset finance extends to machinery and high-value industry equipment.

In both instances the asset itself may be used as security against the loan or lease, offering higher borrowing power. 

How to Choose the Right Asset Finance Provider

As we’ve discussed, there are lots of options out there when it comes to asset finance. It’s important to understand your own business requirements for an asset first and then look at what products and offers may be available to you. 

With any financial decision, it’s always important to get expert advice and understand the terms and any inclusions for a financial product you may take on.

Get Started with Asset Finance Today

Got a question or need help acquiring an important business asset? A Metro broker can help guide you through the asset finance application process and help get you and your business the asset/s it needs. 

With a range of tailored products to choose from with great rates and flexible terms, one of our friendly brokers will help you find a solution that’s right for you.

Future of Sustainable Business Loans: Financing Green Equipment

Explore the future of sustainable business loans and how financing green equipment can drive your business towards a sustainable and eco-friendly future with Metro Finance.

Why Sustainability Matters in Business Finance

Sustainability is a key consideration for both business and consumers. Now more than ever, looking at business operations through the lens of being more environmentally conscious and sustainable has become paramount, but the impacts of this can be felt beyond shifting consumer preferences and public reputation: sustainability also has the power to drive efficiency and even put money back into the pockets of business owners. 

The world is moving towards a greener economy, placing greater importance on businesses’ environmental and societal impacts than ever before. New technologies, systems and processes are helping businesses drive their own sustainable outcomes, with financing playing an important role in enabling this transition. 

In this blog we’ll take-a-look at sustainable business loans, and what they could mean for securing a range of sustainable assets.      

What Are Sustainable Business Loans?

In a nutshell, as the name suggest, a sustainable business loan is a form of financial product designed to support the acquisition of a range of sustainable assets to help businesses on their journey to reduce their environmental impact. This can include assets such as electric vehicles (EVs), chargers, solar panels and batteries, and even agricultural equipment and forklifts. 

Sustainable business loans often offer discounted rates, and sometimes even more flexible terms than other business loan products. Thanks to a variety of State and Federal Government incentive programs, businesses may be able to purchase sustainable assets at a reduced rate or have things like stamp duty or fringe benefit tax (FBT) waived, making them more attractive than other assets. 

iStock-1061249882 1

Benefits of Financing Green Equipment

Aside from the immediate cost savings often attributed to sustainable assets, there are several other key advantages when it comes to financing green equipment, including:

01 /

Cost Savings Through Energy Efficiency

Many sustainable assets either consume less energy overall, or are powered by cheaper renewable fuel sources, such as electricity when compared to fossil fuels – this helps businesses save money. 
Having the ability to recharge assets like electric vehicles on-site is also a benefit in reducing downtime, as they can recharge while the driver is at work or overnight when not in use during cheaper off-peak periods.  

02 /

Enhancing Business Reputation

Many of today’s consumers are conscious of their own environmental footprint and will align themselves with businesses that are doing their part to tackle sustainability too. In a recent Metro business survey 35.7 percent of respondents believed their business was well-respected in the community because of its sustainability efforts, while 26.4 per cent cited customers seeing sustainable business as industry leaders.

03 /

Compliance With Environmental Regulations

State and Federal Government, along with various industry and sector bodies, are implementing a range of regulations to bring down Australia’s carbon emissions and encourage the uptake or greener technologies. Sustainable assets can help businesses meet their sustainability obligations and adhere to any current or future regulations that may come into force, potentially also avoiding future fines or additional charges incurred on less-sustainable technologies.

How Sustainable Business Loans Work

Let’s now take-a-look at the ins and outs of how to apply for a sustainable business loan with Metro’s MetroEco product:

Eligibility Criteria for Green Financing

Aside from applying to a relevant sustainable asset such as an electric vehicle, there may be specific eligibility criteria that applicants must meet in order to secure a loan from a lender. Lenders may have different eligibility requirements depending on the finance product you choose. Eligibility requirements usually apply for both the asset whether it’s new or used, as well as the person or business applying. To find out more about eligibility with MetroEco.
women driving car
beach

Application Process: What Businesses Need to Know

Once you meet the eligibility requirements, it’s time to apply for a business loan. Here are some things you need to know before making an application:

Credit History: Your credit history plays a significant role in the loan evaluation process. For example, when applying for finance with Metro, we consider factors such as credit score, payment history, and credit utilisation.

Loan Amount and Term: Metro assesses the loan amount being requested and the proposed loan term. The loan term is evaluated to ensure that it is reasonable and feasible for the borrower to repay the loan within the given timeframe.

Repayment Ability: When assessing a loan application, most lenders will also look at the applicant’s financial capability to make regular payments for the duration of the loan term.

To find out more, head to the MetroEco page or talk with one of our friendly brokers. 

Future Trends in Sustainable Business Finance

Growing Demand for Eco-Friendly Business Models

Make no mistake, sustainability is fast becoming a major consideration for all types of businesses, both in Australia and around the world. New technology is playing a large part in making businesses more efficient and in some instances, saving them money. There is growing demand with consumers and business partners for eco-friendly business models, representing environmental and societal benefits.

women fueling the car
men standing in the back of the car

Innovative Financing Solutions for Green Investments

Just as sustainability is introducing new ways of doing business, so too is it creating new financing solutions. Tapping into a range of government incentives and discounts, financiers like Metro are able to access government funds to help consumers and businesses finance green equipment, offering them attractive finance rates and flexible loan terms.  

Why Choose Metro Finance for Sustainable Business Loans?

There are lots of reasons to consider Metro Finance for its sustainability-linked loans, with a range of innovative products and offers to suit your needs. Some of the main benefits of a Metro business loan include:

Tailored Financing Solutions

At Metro, we understand that every business is unique, and their requirements from an asset finance offer are just as diverse. We pride ourselves on offering individual tailored solutions for our customers, and our broker partners go the extra mile to ensure that Metro customers get the best deal possible. 

Expertise in Green Equipment Funding

As an award-winning non-bank lender, we constantly strive to do things differently. Our MetroEco product, designed to support the purchase of a range of sustainable assets, is the first of its kind in Australia, and we are very proud to be leading the charge (pun-intended) with the Australian Government to support Australia’s transition to a more sustainable future.

Get Started with Sustainable Financing Today

Just as there are a range of sustainable technologies on offer to suit your business, there are lots of finance options to choose from as well. To find out more about sustainable business finance at Metro, start a conversation with one of our friendly brokers who will be able to provide advice and support.

Getting the Most out of a Novated Lease

A bit of careful consideration now can get better returns later…

A novated lease is a great way to get into the vehicle of your choice, while at the same time taking advantage of a range of money-saving benefits as part of your lease.

As we’ve talked about before, a novated lease is offered through your employer via a service provider, with the lease paid from your salary before tax; thereby potentially reducing the amount of tax you have to pay. Another financial benefit of novating leasing is you don’t pay GST on the car you purchase, or its running costs – once again, potentially putting more money in your pocket.

However, there is another major benefit of a novated lease over other means of acquiring a vehicle, and the answer lies in residual value. 

What is a residual value?

In the case of a novated lease, the residual value of a vehicle is what the vehicle is worth at the end of a lease term, which is set by the Australian Tax Office (ATO). This is calculated by a number of factors, including: 

  • Market desire for that particular vehicle (e.g. Toyota RAV4), based on previous sales in your city and state 
  • Assumed wear and tear on the vehicle over the term of the loan

Knowing your vehicle’s expected residual value at the end of its lease term, which will then inform how much money you need to pay to your lease provider if you decide to keep your vehicle. This is known as a balloon payment. 

iStock-1758139800 1
iStock-1496058893 (1) 1

About ATO residual value percentages

The ATO has guidelines on residual values based on a minimum percentage of the vehicle cost over the lease term. 

These percentages can be lower if the value of the vehicle is likely to be less at the end of the lease term – usually because you intend to add a lot of mileage to the vehicle. This is typically discussed and agreed to by all parties at the time of starting a new lease. 

A few things to remember

You don’t have to keep your vehicle at the end of its lease term. The great thing about a novated lease is the flexibility it can offer – you can also choose to start a new lease with a new vehicle; it’s completely up to you.

If you do choose to keep your vehicle (having formed an unbreakable bond with it over your time together – we get it…) you can opt to pay the previously agreed balloon payment to your lease provider, or even apply to re-finance the amount owing.

Typically, novated leases cost less than a standard car loan or purchasing a vehicle outright; but many use novated leasing as a way to recoup even more money by selling their vehicle privately or to a dealer at current market value – which is often higher than the agreed residual value set at the beginning of a lease. 

Here are some ways that you can ensure the highest possible return for your vehicle at the end of a novated lease:

01 /

Do your research before you buy

By choosing a popular vehicle from a well-known brand you’re already setting yourself up for future resale success.

02 /

Think about the resale value

Just because you like lurid green cars with purple interiors doesn’t mean that many others will. If you intend on selling your vehicle at the end of its lease, specifying it with options and features that have universal appeal is the best strategy. 

03 /

Take good care of your vehicle


Remember, it’s not just age and kilometres that determine residual and resale values. Having a regularly, and correctly, maintained vehicle free from damage dramatically improves its value.

What to do next

Interested to know more about how a novated lease might work for you? It’s important to consider all your options when deciding on whether a novated lease is right for you. Talk to your employer and your accountant first to understand the pros and cons that relate specifically to your financial position before making any decisions. 

EV Novated Leasing Guide

Discover the benefits of an EV novated lease. Compare leasing vs. buying to find the best option for you. Learn more now!

Novated Lease for EVs: A Smarter Way to Drive

The automotive industry is undergoing a technological revolution, with a range of new vehicle types and energy sources to choose from. Electric vehicles (EVs) have emerged as the most popular and readily-available of these new forms of mobility, using batteries to power electric motors, either partially (known as a plug-in hybrid electric vehicle, or PHEV) in combination with a traditional internal combustion engine, or fully using electricity to charge its batteries. 

Just as there are a bunch of options to choose from when it comes to EVs, there are a number of ways to get into an electric vehicle of your own. In this blog we’ll take a look at novated leasing for electric vehicles and talk about some of things you should know if you’re considering one. 

What is an EV Novated Lease?

A novated lease, arranged through a salary packaging provider, allows employees to drive the car they want while maximizing their tax savings. The salary packager facilitates a seamless three-way agreement between the employee, their employer, and a financier like Metro Finance. With lease payments deducted from pre-tax income, employees can enjoy the benefits of a new or used vehicle while reducing taxable income—making salary packaging a smart and cost-effective way to drive.

iStock-1981931922 1
iStock-1497199405 1

How Does Novated Leasing for EVs Work?

Much like a novated lease for any other type of car, a novated lease for an EV will typically include all of the vehicle’s running costs in the monthly lease payments, including things like registration, insurance, maintenance, and even charging costs. 

Benefits of Choosing a Novated Lease for an Electric Vehicle

Let’s take a look at some of the key benefits when it comes to leasing an EV:

01 /

Tax Savings

There are lots of benefits to novated leasing – including consistency of payments to improve cashflow – but the main benefits employees enjoy with novated leasing is the reduction to their pre-tax income via lease repayments, which could reduce their tax liabilities while also taking advantage of additional benefits when leasing an EV over a petrol or diesel-powered car. 

In recent years, State and Federal governments have offered motorists a range of financial incentives to promote the uptake of electric vehicles, making them more affordable than ever to buy or lease. Metro has its own financial product, MetroEco, which offers a range of discounts and flexible terms for sustainable technologies, including EVs. Through a broker, you can explore how MetroEco can help you save on an EV with a loan or lease tailored to suit your needs.

02 /

Bundling EV Running Costs

A popular feature of a novated lease electric vehicle is the bundling of the running costs into one regularly monthly pre-tax payment. All the associated costs of keeping an EV on the road are usually factored in: registration, insurance, servicing and maintenance, and even charging at public-facing charging stations. 

03 /

Reduced Fringe Benefits Tax (FBT)

A recent initiative of the Federal Government is the waiving of fringe benefits tax (FBT) for zero or low-emission vehicles, including any associated running costs. This makes EVs a popular option for employers to offer their employees under salary packaging. If you are interested in salary packaging solutions, you can also explore our commercial finance packages.

04 /

Fixed, Predictable Payments

For many, the predictability of payments is a standout feature of novated leasing, which can help with household budgets and cashflow management. Depending on the type/s of salary packaging offered by your employer, you might also have the option to lease additional vehicles for your immediate family – which once again would contribute to one, monthly bundled pre-tax payment also covering all major vehicle expenses.

Novated Lease vs Buying Electric Cars

Ownership and Flexibility

Put simply, the biggest difference between EV ownership and novated leasing is all in the name: by purchasing a vehicle, either outright or via a loan, you own the vehicle and are responsible for covering all of its expenses; whereas with a novated lease you don’t own the vehicle at the end of the lease term, unless you choose to purchase it.

For many, leasing a vehicle – which is a depreciating asset – is preferable to owning a vehicle that requires constant upkeep and on-road costs. At the end of the lease term, you also have the option to choose a new vehicle and start another lease, meaning that you could be in a new car sooner and more regularly than owning one outright.

iStock-1483175403 1
iStock-1170515668 1

Tax Benefits and Salary Packaging

If you’re comparing EV buy vs lease options, understanding the tax savings and bundled costs of a novated lease is key. Because lease payments are made by your employer from your pre-tax income, it can reduce your taxable income and net you additional tax savings, more than if you had purchased the vehicle.

Out-of-Pocket vs Pre-Tax Costs

Bundling an EV’s running costs into your pre-tax income also helps keep more money in your pocket while enabling predictable cashflow management; meaning you’re not up for more expenses that need to be paid from your income after-tax. 

iStock-1515721216 (1) 1

Is an Electric Vehicle Novated Lease Right for You?

Just as there are a multitude of car brands to choose from, there are just as many vehicle financial options available when it comes to getting into the EV of your dreams. A novated lease EV is a popular option for many as they bundle the lease and running cost payments into one monthly pre-tax transaction, netting a range of benefits and providing greater transparency when it comes to managing a budget. 

A novated lease EV could be your most cost-effective path to electric driving. So If you’re thinking of getting behind the wheel of an EV through a novated lease, talking to your employer is a great place to start. One of Metro’s friendly brokers will also be able to answer any questions you may have about Metro’s novated leases and other financial products, as well as filling you in on any current government incentives and savings to promote EV uptake. 

Start a conversation with a Metro broker by clicking the link here

Novated Leases Explained

Need a car? 

For many of us, having access to our own vehicle is more than a nice-to-have, it’s an essential part of our lives and the jobs we do.

However, there is more than just one way to get into a vehicle of your choice – aside from purchasing outright, getting a loan or entering a guaranteed future value (GFV) programme offered by a manufacturer, a novated lease may be just the ticket to getting you into the car you want, and benefiting from potential tax savings in the process. 

So, what is a novated lease?

With a salary packaging provider, your vehicle costs are bundled into your pre-tax income. They work with your employer to deduct payments and make car repayments to a financier like Metro Finance on your behalf. This setup, known as novated leasing, can help reduce your tax liability and save you money.

Both car loans and novated leases can help you get into a new or used vehicle. However, with a novated lease, your employer makes payments directly to the leasing company, streamlining the process for you. Plus, unlike a standard car loan, a novated lease allows you to bundle running costs—like fuel, maintenance, and insurance—into one convenient, tax-effective package.

car in pedestrian lane
car running

Sounds great, how do I get one? 

First things first, you need to talk to your employer about novated leasing and what options they may have available for employees – in most instances, new employees would need to complete their probation period before being able to access novated leasing if its offered. It’s also a good idea to talk to your accountant about how the potential lease may affect your future tax payments. 

From there, if your employer offers novated leasing as an employee benefit, the leasing provider takes care of the heavy lifting. They work with your employer to gather relevant details—such as your income, expenses, and living circumstances—and guide you through the process, including a credit check, to get you on the road faster.

Once approved, your lease agreement between you, your employer and the finance provider is set-up before you buy a car (or have one purchased for you by the financier). The agreement will include things like lease duration, how many kilometres you intend to drive each year and, of course, the type of car you’re keen on buying.

What are the benefits of novated leasing?

In short: saving you money. Because your novated lease would be paid from your salary before tax, it could potentially reduce the amount of tax you have to pay. Another financial benefit is you don’t pay GST on the car you purchase, or its running costs – once again, potentially putting more money in your pocket. 

The other big benefit is the flexibility of not owning the car outright (which you can still do by paying any agreed amount owing at the end of the lease term), and knowing how much it will cost you month-to-month with set payments.

happy family inside the car

Anything else I should know?

It’s important to consider all your options when deciding on whether a novated lease is right for you. Start a conversation with your colleagues and find out more about the leasing company your employer uses.