{"menuItems":[{"label":"How does a non-maintained novated lease work?","anchorName":"#how-does-a-non-maintained-novated-lease-work"},{"label":"Novated lease calculator","anchorName":"#novated-lease-calculator"},{"label":"How to compare non-maintained novated lease","anchorName":"#how-to-compare-non-maintained-novated-lease"},{"label":"Pros and cons of non-maintained novated lease","anchorName":"#pros-and-cons-of-non-maintained-novated-lease"},{"label":"Things to be cautious of","anchorName":"#things-to-be-cautious-of"},{"label":"Car loan comparison","anchorName":"#car-loan-comparison"},{"label":"How to apply for non-maintained novated lease","anchorName":"#how-to-apply-for-non-maintained-novated-lease"}]}
Novated leasing is a loan which involves an employee, employer and financier. A car lease is taken out by the employee with the employer taking on the financial obligation. Under the agreement, the employer will make monthly payments on the employee’s behalf through a salary sacrifice.
As a non-maintained novated lease, the employee would then take on the costs of maintaining the vehicle. That includes budgeting for the maintenance and other running costs. In other words, the employer’s only obligation would be to finance the vehicle. A fully maintained novated leave is when the employee doesn’t need to fork out these costs.
Although GST is not paid up front, it will still be charged on monthly payments and the good news is that this can be claimed as a tax deduction.
How does a non-maintained novated lease work?
As mentioned, the employer will finance the lease while the employee takes on responsibility for the car. The employee will not receive any extras and the costs of fuel, tyres, servicing, insurance and more will all be handled by the employee. These costs are handled by the employee’s post-tax income.
This lease can be used to acquire both used and new cars with a value of more than $10,000 but is not payable upfront. Instead, it will be charged on the monthly payments making it a claimable tax deduction.
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.
The calculator below will let you calculate and give you an indication of repayments and how much the lease may cost you. Once you have an idea of financial commitments, compare your figures with the car loans compared below
How to compare non-maintained novated lease
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. However, there is good news and that is all running costs are normally pre-tax.
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 lease
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
Expensive. Generally, leasing costs a lot more than a loan. There are higher charges and the payments are always ongoing, meaning that you pay more than you would on a car loan.
Freedom. You don’t have the freedom to customise the car in a permanent way.
Things to be cautious of
Going overboard on distance. Distances or kilometres 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 mile. However, you don’t have to underuse the car since you will not get credit for any miles that are unused.
Customising the car. It is generally a good idea not 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 excess for 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. The table below can help with your due diligence.
Car loan comparison
It is always important to compare your finance options from a range of lenders. The below table will give you an idea of the rates and fees for car loans in Australia.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
Before you can apply for a non-maintained novated lease, first compare the options that are available from different lenders.
This lease is eligible for all employees as it is offered as an option with their salary package. The application will involve the employer who will take on the financial obligation as well as the employee who will take on all running costs and maintenance.
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.
Find out more about how you can be a driver with DiDi, even if you don't own your own car. Rent a car and start making money using the ridesharing platform.
Australian Military Bank lets you finance a car, motorbike or boat up to five years old with its competitive car loan. Find out about the rates and fees in this review.
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.
Important information about this website
finder.com.au is one of Australia's leading comparison websites. We are committed to our readers and stands 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. You can learn more about how we make money.
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 note that the information published on our site should not be construed as personal advice and does not consider your personal needs and circumstances. While our site will provide you with factual information and general advice to help you make better decisions, it isn't a substitute for professional advice. You should consider whether the products or services featured on our site are appropriate for your needs. If you're unsure about anything, seek professional advice before you apply for any product or commit to any plan and read any disclosure documents (such as any Target Market Determination (TMD) and/or Product Disclosure Statement (PDS)) issued by the provider before making a decision.
Providing or obtaining an estimated insurance quote through us does not guarantee you can get the insurance. Acceptance by insurance companies is based on things like occupation, health and lifestyle. By providing you with the ability to apply for a credit card or loan, we are not guaranteeing that your application will be approved. Your application for credit products is subject to the Provider's terms and conditions as well as their application and lending criteria.
Please read our website terms of use and privacy policy for more information about our services and our approach to privacy.
