What happens if I leave my employer?

If you leave your employer during your novated lease, the responsibility of the lease remains on you. This means you will either need to cover what's left on the lease or arrange to transfer the lease to a new employer (if they allow salary sacrificing in this way). You may be able to make an agreement with your existing employer to continue making repayments to them until the car is paid for, or you can take over the whole agreement yourself.

What happens if I write off the car?

With a non-maintained novated lease, you will have been in charge of the insurance. The very first thing to do is call your insurance provider. This may or may not provide enough cash to pay off the lease, but either way, the finance company will need to be paid the remaining amount.

Non-maintained novated lease calculator

A novated lease is an agreement between yourself, your employer and a lease provider to lease a car on your behalf.
Your employer will take the cost of lease payments from your pre-tax salary.
Unlike a maintained novated lease, the non-maintained lease agreement will not cover the costs of service and maintenance. You will need to cover those costs yourself.

Novated lease calculator

The calculator below will let you calculate and give you an indication of repayments and how much the lease may cost you.

You'll need to enter the purchase price of the vehicle as well as the interest rate, any residuals and the loan term.

Purchase Price

Residual Value (Balloon Payment)

Lease Term (Years)

Interest Rate (% p.a.)

Payment Timing

Your Results

Monthly Repayment $0.00

Total Interest Payable $0.00

Total Payment Amount $0.00

Financed Amount $0.00

Total of Monthly Payments $0.00

Lease Term 0 months

Payment Breakdown

Total of monthly payments: $0.00
Plus residual payment: $0.00
Total amount paid: $0.00

Loan Balance Chart

What is a non-maintained novated lease?

Novated leasing is where an employee leases a car through salary sacrificing. A car lease is taken out with a third party leasing company by the employer on behalf of the employee.

A non-maintained novated lease is one where the salary sacrifice only covers the cost of the lease payments and not any of the maintenance costs.

How does a non-maintained novated lease work?

The payments for the lease are facilitated by the employer and come through the employee's pre-tax salary.

With a non-maintained novated lease, the salary sacrifice covers the cost of the lease only. The employee needs to make sure their post-tax income can cover the costs of maintaining the vehicle.

The novated lease can be used to acquire both used and new cars with a value of more than $10,000.

This type of lease can be beneficial to both the employees and employer. The employer gets to enjoy reduced administration costs, which can be high with company owned cars. Should the employee leave that place of work, the novated lease and all financial obligations cease to be assumed by the employer and are reverted to the employee. The employee therefore can retain equity accumulated by the vehicle.

What's the difference between a maintained and non-maintained novated lease?

As explained above, the costs for the lease only come out from the employee's pre-tax salary. Costs for maintenance must be paid by the employee separately.

With a fully maintained novated lease, the costs of maintenance come out of the pre-tax salary as well. These costs can include servicing, maintenance and insurance.

Related reading: Learn about fully maintained novated leases

Understanding non-maintained novated leases and tax

You won't pay GST on the price of the vehicle, but each lease payment will come with GST attached. This GST will be tax deductible.

The lease repayments will come out of your pre-tax salary, meaning you'll pay less tax on your income as well.

Normally, these lease repayments would count as a fringe benefit and you'd end up paying fringe benefits tax (FBT). However, battery electric and hydrogen fuel cell cars are exempt from FBT as long as no luxury car tax was payable on the car (in practice, its value is under the luxury car tax threshold for fuel-efficient vehicles). Plug-in hybrids lost the exemption from 1 April 2025, unless the car was already being provided under an arrangement committed to before that date.

The tax savings on a novated lease can mean it is a cheaper way to own a car than buying one outright or with a loan.

How to compare non-maintained novated leases

It might be that your employer already has a supplier it uses for novated leases, but if not and you're in a position to help find a good one, here are some things to bear in mind:

Fees.

Different financiers will have different fees for borrowers. Before you take on a lease, find out what the applicable fees are and how they compare to other financiers in the market.

Running costs.

What are the running costs you will have to bear and how do they compare to that of a maintained novated lease? For the employer, the costs are less since the employee will have to maintain the costs.

Interest rates.

Can you get better interest rates on your lease? That is always a possibility. Compare the different interest rates offered by different providers before you take on any lease.

Features.

There are different features that are offered with novated leases. You can get fleet discounts, regular payment structures and much more even with a non-maintained lease. Compare features to get the most suitable for you.

Pros and cons of non-maintained novated leases

Pros

Flexibility. This type of car lease gives you flexibility on different levels. For starters, you can select the car of your choice so long as its value is above $10,000. The car also doesn't have to be used solely for business and when the employee leaves employment, they take on the financial obligations.
Tax deductions. This lease comes with good tax benefits. You don't have to pay GST on the purchase price and repayments are all pre-tax.
Reduced administration costs. With company cars, you would not only need to bear the cost of purchase, but also maintain, insure and undertake any more costs associated with the car.

Cons

Can cost more. Before any tax savings, leasing can cost more than a car loan because there are extra fees and charges and the payments are ongoing. Whether a novated lease works out cheaper after the salary-packaging savings depends on your income, the car and whether it's exempt from FBT.
Freedom. You don't have the freedom to customise the car in a permanent way.

How to apply for a non-maintained novated lease

The first thing to do is check that the option for a novated lease is available through your employer. If they have set this up before with another employee, they may be able to handle most of the process for you.

You may also need to provide:

Vehicle details. This includes vehicle make and model, build year, where you want to buy it i.e. dealer, auction, private seller.
Financial details. This includes the lease length you prefer, the vehicle price, and the running costs.
Contact information. This includes your name, address and phone number, name of your current employer and details of your gross salary.

Things to be cautious of

Going overboard on distance.
Distance is often limited and it’s important that you maintain the mileage that is indicated on your contract. If you drive more than your indicated mileage, you may be fined for excess mileage per extra kilometre. However, you don’t have to underuse the car since you will not get credit for any kilometres that are unused.
Customising the car.
It is generally a good idea not to customise a leased vehicle as you may be charged extra.
Poor maintenance.
Just because the car is leased doesn’t mean that you can get away with poor maintenance. The car must be in good condition and you may be charged for excess wear and tear.
Not comparing.
When choosing and comparing vehicle options for your business, it is always a good idea to compare a range of finance options and lenders.

Frequently asked questions about non-maintained novated leases

If you leave your employer during your novated lease, the responsibility of the lease remains on you. This means you will either need to cover what's left on the lease or arrange to transfer the lease to a new employer (if they allow salary sacrificing in this way).
You may be able to make an agreement with your existing employer to continue making repayments to them until the car is paid for, or you can take over the whole agreement yourself.

Sources

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Written by

Matt Corke

Head of Publishing Ventures

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Matt Corke is Finder’s head of publishing ventures. Prior to this he was head of publishing for Australia, New Zealand and emerging markets. Matt built his first website in 1999 and has been building computers since he was in his early teens. In that time, he has survived the dot-com crash and countless Google algorithm updates. See full bio

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Non-maintained novated lease calculator

If a novated lease calculator doesn't sound exciting enough, there's a section on tax benefits too!