A novated lease is a three-way agreement between you, your employer and a financier. You select the vehicle that’s right for you, and your employer makes lease payments to the financier on your behalf from your pre-tax income, netting you savings along the way.
For an in-depth breakdown, visit our dedicated page on what is a novated lease?
Yes. A novated lease is a form of salary sacrifice and is commonly referred to as salary packaging by employers.
What is a novated lease? Find out here.
There are several key differences between a novated lease and a traditional car loan, including:
Check out our page on Metro car loans to learn more.
Can’t decide which is the best option for you? Start a conversation with a friendly Metro team member.
Generally, any salaried employee whose employer offers salary packaging can access novated leasing, subject to any eligibility criteria set by an employer, such as completing an initial probationary period when starting a new job.
No – that’s a common misconception. A novated lease can make a lot of sense for a range of incomes as the potential tax benefits and convenience can be enjoyed by all types of employees.
Novated lease myth-busting: learn more and separate fact from fiction.
No. In most instances you can use your vehicle in your personal life. Some employees also lease additional vehicles for their immediate family – once again taking advantage of pre-tax savings and the convenience of bundling costs for all vehicles into one regular payment.
You certainly can! Depending on your employer’s salary packaging offering you can novated lease a used vehicle, subject to any vehicle eligibility requirements.
Yes, electric cars can be novated just like petrol/diesel cars. In fact, Australia now offers an FBT exemption on eligible EV novated leases, meaning electric vehicles provided under novated leases can be completely free of fringe benefits tax. This makes novated leasing especially attractive for EVs.
Find out more about an electric car novated lease.
Yes. Many employees lease additional vehicles for their immediate family and continue to take advantage of pre-tax savings and convenient running cost bundling.
Yes. Under normal circumstances family members can also drive the car, provided they meet the terms of the lease, hold a valid licence and adhere to all relevant road laws.
There are a wide range of passenger vehicles to choose from with a novated lease. Speak to your employer about the salary package they provide for employees, and whether there are any restrictions on specific vehicle types.
There are numerous benefits, including income tax savings (paying for the car pre-tax reduces taxable income), GST savings on the purchase and running costs, and convenient budgeting (all car expenses bundled into one payment).
Employees often save thousands over the life of the lease due to these tax advantages.
It’s important to remember that unlike a car loan a novated lease does not directly provide a pathway to ownership of the vehicle, despite there being the potential to purchase the vehicle at the end of the lease term.
While there are many benefits to novated leasing, like any financial product it’s important to do your homework to figure out if it is right for you.
There are many ways to save with a novated lease, however specifically how much will depend on your own circumstances and the vehicle you choose to lease.
To find out if a novated lease with Metro is right for you, chat with one of our friendly team members.
Fringe Benefits Tax is paid by the employer on the private use of the leased vehicle, which is usually passed on to the employee. However, while FBT applies, it can be offset with your post-tax contribution.
In some instance, like with electric vehicles, the Australian Government has waived FBT to encourage uptake of the new technology.
To find out more about an EV novated lease, head to our dedicated page.
With any financial product, it’s a good idea to talk with your accountant to understand how FBT might impact you.
Usually you don’t need to keep a logbook with a novated lease if you are using the standard Employee Contribution Method to reduce FBT. However, in some instances, you may need to keep one if you need to keep track of specific vehicle use or if your employer requires you to.
Chat with your employer to find out if they have any specific requirements for salary packaging.
A novated lease is a great way to get into the vehicle of your choice while enjoying pre-tax savings and having the consistency and convenience of one regular lease payment, but it is important to understand whether any financial product is right for you. Read our full guide on is a novated lease worth it to find out more.
Do your homework: speak with your accountant and your employer to learn more about novated leasing, or speak to one of our friendly team members here.
A typical novated lease payment includes the cost of the vehicle and its running expenses, which includes things like registration, insurance, servicing and maintenance and even fuelling.
All payments and costs will be explained to you prior to accepting the terms and commencing a novated lease, however it’s a good idea to speak with your employer about any changes to your needs or budget.
Unlike a car loan, with a novated lease the vehicle remains the property of the financier, while the employee gets to use it.
Understanding novated leasing: learn more here.
A residual or balloon value refers to what the vehicle is worth at the end of the end of the lease term, which serves as the amount required for the employee to pay if they decide to purchase the vehicle. This is set-out at the beginning of the lease.
At the end of a novated lease, an employee usually has three options to choose from:
Yes, however you may be liable for additional costs and fees for breaking the lease, which would be outlined at the time of commencing the agreement.
In the instance that you change jobs, you might be able to move your existing lease to your new employer and have them continue to make lease payments on your behalf as before.
Got a question? Reach out to a member of our award-winning team.
Should you change jobs, you may be able to move your existing lease over with your new employer and have them continue to make lease payments for you.
If you are changing jobs, talk to your new employer about the salary packaging they offer and how you might be able to roll-over your current lease.
Don’t just take our word for it. See what our satisfied customers and accredited introducers have to say about their experiences working with Metro.
Getting a novated lease is a simple, straightforward process with only a few steps:
Ready to apply for a Metro novated lease? Learn everything you need to know here in our simple guide.
