There’s a common misconception that novated lease is only worth it for high flyers, but that’s not true. Any and all car buyers are looking to get the best bang for their buck - and that means looking at everything, such as whether buying a car outright is the right choice or if financing car running costs is better.
It’s a form of financing that can suit a wide range of car buyers and users – regardless of how much money you’re earning. Even on a modest salary, reducing your taxable income equals paying less tax.
Calculate how much a Novated Lease could save you each year.
Here are a few points to consider as to whether a novated lease is worth it and how it can work for you in 2025.
Maximise your tax savings on running costs
A novated lease offers more than just a convenient way to get behind the wheel — it’s a powerful tool for reducing your income tax. By including your car’s running costs — such as fuel, servicing, insurance and registration — in your regular lease payments, you effectively lower your taxable income, resulting in real tax savings over the life of your lease.
How does a novated lease work?
These novated lease repayments are made directly from your salary through your employer and arranged by a finance company, making it a seamless part of your salary packaging. Whether you’re leasing for one year or five, your lease term will impact the total repayment amount and how much you save, so it’s important to choose a structure that suits your driving needs and budget.
Is novated lease worth it for luxury cars?
Looking at a high-end vehicle? Even if your car sits above the luxury car tax threshold, a novated lease can still deliver value by spreading costs and simplifying expenses — especially when compared to paying for everything separately or taking out a traditional car loan.
No minimum kilometre requirements
Another myth about novated leasing is you have to drive a minimum number of kilometres each year. This used to be the case, but since the changes to the FBT laws in 2011, it’s no longer required to get the best tax savings. Now, the FBT - better known as Fringe Benefits Tax - liability is no longer determined by the number of kilometres travelled in the FBT year.
Regardless of whether you drive 10,000 km or 50,000 km, the flat 20% fringe benefits tax (FBT) liability rate remains. In fact, driving lower kilometres on your novated lease may have a positive impact on your novated lease residual value when you come to trade the same car in at the end of the lease!
On top of this, an eligible electric vehicle can see even more savings thanks to an FBT exemption.
Can a novated lease work as an option for low wage growth?
If you don’t see a pay rise on the horizon, there are other ways you can still save yourself money. Wage growth in Australia has slowed down, so it’s time to take matters into your own hands.
Instead of asking for a raise to your pre-tax salary (or waiting until the market takes a more positive turn), opt for a novated lease to reap the financial rewards of an employee contribution method that works for everyone.
Cars are expensive, but a necessary part of our life. When the chances of a pay rise don’t seem likely in the foreseeable future, getting the funds together to purchase a new or used vehicle can be difficult – or even impossible. Even a car loan can be a difficult investment.
A fully maintained novated lease can provide the perfect solution, even if wages are at an all-time low. No deposit is required and substantial discounts on the vehicle purchase price make it a practical option for low-income earners or anyone still hanging on for a pre-tax income boost.
You’ll get a fuel card
One of the practical perks of a novated lease is the inclusion of a fuel card, which covers your fuel expenses as part of your lease package. It’s a simple way to manage ongoing running costs without dipping into your take-home pay — and it can make budgeting over your lease period much easier.
If you opt for one of today’s many fuel efficient vehicles, the savings stack up even more. Lower fuel consumption combined with the convenience of a fuel card means less spent at the pump and more predictability in your monthly novated lease repayments.
Your lease agreement also typically includes other essentials like scheduled servicing, registration, replacement tyres and comprehensive insurance — all bundled into one regular payment. It’s these kinds of extras that make a novated lease not only tax-effective but genuinely hassle-free.
An electric car makes even more sense with a novated lease
With petrol prices staying high and more models hitting the market, choosing an electric car under a novated lease is becoming one of the smartest ways to save. One of the major novated lease advantages for EVs is how much you can cut down on vehicle running costs — there’s no petrol to pay for, and maintenance expenses are generally lower too.
When you lease an EV through a novated lease arrangement, your lease payments and novated lease repayments typically cover much more than only the purchase price. You can bundle in servicing, insurance, tyres, and even charging costs, giving you one predictable monthly payment that’s deducted from your pre-tax salary.
Potential further savings on an electric car purchase price with FBT exemption
Better still, eligible electric vehicles under the luxury car tax threshold may qualify for FBT exemptions, unlocking even more tax benefits for employees. That means more savings throughout your lease period, without the need for upfront capital or a traditional car purchase.
At the end of the lease, you’ll usually have a few flexible options — including refinancing the residual payment, returning the vehicle, or upgrading to a newer EV. It’s a low-risk, future-friendly way to access the latest in vehicle finance and technology without tying up your savings.
Are there any novated lease disadvantages?
Like any form of vehicle finance, a novated lease does come with a few things to be mindful of. For example, you’ll need to be working for an employer who offers salary packaging and agrees to enter into a lease agreement on your behalf. Ending your employment before the lease period finishes could also mean you need to restructure or transfer the lease.
There’s also a residual payment due at the end of the lease if you want to own the vehicle outright. However, these factors are part of any well-structured finance product — and for many people, the tax benefits and convenience of fixed novated lease payments more than make up for them.
So, is a novated lease worth it?
The answer depends on your income, the type of car you want, your driving habits, and what your employer offers through their salary packaging provider. For some, the novated lease advantages will far outweigh the alternatives — especially when it comes to saving on vehicle running costs and enjoying predictable budgeting.
But a novated lease isn’t a one-size-fits-all solution. That’s why the best next step is to speak with a novated leasing specialist with experience and tailored support that can help you understand exactly how a novated lease could work for you — and whether it’s the right fit for your needs in 2025 and beyond.
Get a novated lease worth your money from easi
Easi is a leasing company with 20 years of experience in the industry of car leasing and car finance - meaning we can use our knowledge to deliver effective business car solutions every time. Our wide range of novated lease vehicle options come under flexible contract terms ranging from utes, to large SUVs, to hatchbacks and more.
As Australia’s novated leasing specialists, Easi have developed an unparalleled expertise and understanding of the entire novated leasing process, providing tailored solutions to meet your individual needs. Our approach simplifies what can often be a complex process, making it Easi for all employees to benefit from tax-effective financing for their vehicles.
Our highly trained team is dedicated to providing exceptional customer service and helping customers optimise both the financial and practical benefits of novated leasing. Plus, with offices all over Australia, you’re never too far away from starting your novated leasing journey with the best in the business.
For more information on novated lease pros and cons and whether it’s right for you in 2025, speak to one of our staff to see how we can use our skills as a premier novated lease provider to help get you into your new car!
