A novated lease is a salary sacrifice arrangement where your car lease repayments are taken from your pre-tax salary, reducing your taxable income.
The Kia EV5 is a mid-size electric SUV available for novated lease, offering even more tax benefits as an electric vehicle.
Depending on any vehicle upgrades and the specific terms of your novated lease, it can often be much more cost-effective than taking out a car loan.
What is a novated lease?
A novated lease is a three-way agreement between an employee, the employer, and a leasing company.
The employer agrees to make monthly repayments, which it takes out of the employee's salary. Crucially, it takes those repayments from the employee's pre-tax salary. This reduces the employee's taxable income.
It can lead to substantial tax savings and often includes vehicle expenses like maintenance and insurance.
Why choose a novated lease for the Kia EV5?
The Kia EV5 is an electric mid-size SUV which is available for novated lease. You might choose this for a number of reasons:
Novated leasing can make buying a new car more achievable.
You can save on repayments because you're using pre-tax income.
When you buy an electric vehicle like a Kia EV5 you won't have to pay Fringe Benefits Tax (FBT).
Depending on any upgrades you include, the cost of the Kia EV5 is generally under the Luxury Car Tax (LCT) threshold.
Kia EV5 novated lease cost vs buying outright
When you take out a novated lease, the repayments come out of your pre-tax salary. This reduces your taxable income and means it will often cost you less to buy a car that way.
Let's take a look:
Fully maintained novated lease
You're on an annual salary of $100,000, which is a monthly pre-tax income of $8,333.33.
You choose a Kia EV5 AIR 2WD priced at $61,170 on a 5 year fully maintained novated lease. You estimate you'll be driving 10,000kms a year.
Your monthly lease repayments are $946.83 a month, which comes out of your pre-tax salary and includes costs like insurance, registration and 1 set of tyres.
Your taxable income is reduced to $7,386.50, which means your take-home pay falls to $5,787.33 a month from $6,431.33.
This means your $946.83 lease repayment only reduces your net income by $644.
At the end of the lease you can pay a residual value of $19,302 to own the car.
Factoring in all costs and tax savings, the total effective cost to you is $56,836.
Buying a Kia EV5 through a car loan
You borrow $61,170 through a 5 year car loan with a personalised interest rate of 9%.
Your monthly repayments, assuming no loan fees, will be $1,270.
This comes out of your post-tax salary, meaning you only have $5,161.33 left.
In total, your car loan will cost you $76,188.
You still need to pay separately for insurance, registration and any repairs or maintenance which would cost thousands more each year.
Verdict: A novated lease saves this person at least $16,352.
Who benefits most from a Kia EV5 novated lease?
Someone seeking the savings and benefits of an electric vehicle.
A full-time employee with a permanent and stable job.
Mid-to-high income earners who can afford the consistency of the repayments as well as the lower take-home salary.
Novated lease repayments are taken from the employee's pre-tax salary. This means the repayments are effectively managed by the employer and the employee doesn't need to do anything.
As well as the logistical benefit, this means the employee's taxable income is reduced. The biggest benefit of this is that the employee loses less of their take-home income than if they were to make the payments post-tax.
You lower your taxable income. If you take out a fully maintained novated lease, you'll save even more.
It's a cost-effective and manageable way of buying an electric vehicle.
You still have the option of buying the car at the end of the lease, but you can also choose a new lease with a different vehicle.
Cons:
You don't own the car until you've paid the residual value at the end of the lease, so there are restrictions on being able to modify the vehicle.
If you want to own the vehicle at the end of the lease you'll need to pay a one-off residual cost which can be a large financial burden.
You might have less control over where you buy fuel, get your insurance or get your car serviced.
Alternatives to a Kia EV5 novated lease
Standard car loan:
You can buy the car by taking out a car loan and making principal and interest repayments.
Dealer finance:
Car dealerships will often have finance options. They might offer lower monthly repayments but you'll still need to pay a residual payment at the end of the term.
Buying outright:
If you have the funds saved up you can simply buy the car in cash! It's a large chunk of money to lose in one go though, so make sure you won't end up with no emergency savings or financial buffer.
Subscription services:
If you're not worried about ever owning the car, you could opt for a car subscription instead. You can borrow a car for a minimum of 30 days and your fees will cover the cost of roadside assistance, comprehensive insurance, and service and maintenance.
Frequently asked questions about Kia EV5 novated leasing
Yes, you can get a Kia EV5 with a novated lease. There are several versions of this model available and they qualify for FBT exemptions.
The savings you'll make on a novated lease will depend on several factors:
The specific model you choose as well as any upgrades.
Your salary.
Whether you choose a non-maintained or a fully maintained lease.
How many kms you expect to drive each year (if fully maintained).
Once your novated lease period has ended you can decide whether you want to extend your current lease, start a new lease with a new vehicle or pay the residual cost to buy your vehicle.
Yes, you have the option of choosing a fully maintained novated lease. This includes all of your running costs and maintenance. It means saving even more money because these costs come out of your pre-tax salary instead of paying for these costs out of your already-taxed income.
Rebecca Pike is Finder’s money editor, with over 7 years of experience in mortgages and personal finance. A frequent TV and radio commentator, she frequently appears on Sunrise and 7News, Today and 9News, as well as Sky News, Channel 10 and across radio and print. Rebecca previously served as Editor of Mortgage Professional Australia. She has a Master’s degree in Journalism as well as ASIC-recognised certifications in Tier 1 Generic Knowledge and Tier 2 General Advice Deposit Products, which comply with ASIC guidelines.
See full bio
Rebecca's expertise
Rebecca
has written
270
Finder guides across topics including:
Want to buy a classic car but don't have the ready money? There are still financing options available for classic vehicles. Find out what loans you have to choose one and which one will work best for you.
If you are unhappy with your current car loan, refinancing it could be the right choice for you. Most people refinance their car loan to get a lower interest rate, get more flexibility in their car loan or get more additional features. Read our guide to see if it's right for you.
If you're looking to a buy a car you can consider a secured car loan to help finance your vehicle purchase. The loan is guaranteed so you can enjoy a lower interest rate – compare your options and apply today.
You can still get a car loan if you want to finance a used car. Find out how you can get a used car loan and see what rates are available for the used car you want. Learn how to best compare lenders and apply for your loan today.
Whether you're upgrading your current car or looking for a new vehicle for your first car purchase, a new car loan can help you finance your set of wheels. Find out everything you need to know about new car loans to help you find the right loan for you.
Important information about this website
Finder makes money from featured partners, but editorial opinions are our own.
Finder is one of Australia's leading comparison websites. We are committed to our readers and stand by our editorial principles.
We try to take an open and transparent approach and provide a broad-based comparison service. However, you should be aware that while we are an independently owned service, our comparison service does not include all providers or all products available in the market.
Some product issuers may provide products or offer services through multiple brands, associated companies or different labeling arrangements. This can make it difficult for consumers to compare alternatives or identify the companies behind the products. However, we aim to provide information to enable consumers to understand these issues.
We make money by featuring products on our site. Compensation received from the providers featured on our site can influence which products we write about as well as where and how products appear on our page, but the order or placement of these products does not influence our assessment or opinions of them, nor is it an endorsement or recommendation for them.
Products marked as 'Top Pick', 'Promoted' or 'Advertisement' are prominently displayed either as a result of a commercial advertising arrangement or to highlight a particular product, provider or feature. Finder may receive remuneration from the Provider if you click on the related link, purchase or enquire about the product. Finder's decision to show a 'promoted' product is neither a recommendation that the product is appropriate for you nor an indication that the product is the best in its category. We encourage you to use the tools and information we provide to compare your options.
Where our site links to particular products or displays 'Go to site' buttons, we may receive a commission, referral fee or payment when you click on those buttons or apply for a product.
When products are grouped in a table or list, the order in which they are initially sorted may be influenced by a range of factors including price, fees and discounts; commercial partnerships; product features; and brand popularity. We provide tools so you can sort and filter these lists to highlight features that matter to you.
Please read our website terms of use and privacy policy for more information about our services and our approach to privacy.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
How likely would you be to recommend Finder to a friend or colleague?
0
1
2
3
4
5
6
7
8
9
10
Very UnlikelyExtremely Likely
Required
Thank you for your feedback.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
The information provided by Frankie is general in nature and has been prepared without considering your objectives, financial situation or needs. Frankie may make mistakes so it's important that you review the information before deciding. By messaging Frankie, you agree to our Terms and have read our Privacy Policy.
