FAQs

Essentially the employee selects the car with Novated Lease, subject to meeting the guidelines set by the ATO. The employer may set limits on the price based on their individual preference for leasing payments.

Employees will need to cover all the costs relating to the vehicle under lease. This includes the monthly payment, maintenance, rego, insurance and potentially any FBT which may apply.

Novated leases are priced at commercial not personal rates. Employees may save on income tax and it may be an effective way to better manage their budgeting.

The employer’s not the employee’s credit profile is assessed with Leasing applications.

Interest rates on leasing are individually offered based on the application assessment by the lender. Rates can vary across the lending market.

Where an employee resigns from their job while a salary packaging agreement is in place, they will need to negotiate with the employer to finalise the Novated Lease to take ownership of the car.

Considerations around the preferred term for a Novated Lease may include how long the employee intends to stay in the job and the repayments and residual associated with different lease terms.

A residual is a component of leasing agreements. It is a percentage of the car’s value which is due to be finalised at the end of the term. Minimum residual values are set by the ATO.

Leasing applications are in the name of the employer and rates assessed on the credit profile of the business.

Novated Lease deals must involve the employer and the employee. If the employer does not agree, the employee cannot proceed to apply on their own.