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A novated lease lets you pay for your car, fuel, insurance and running costs from your pre-tax salary. Thor Finance compares options from 45+ lenders to find the right novated lease for you.
A novated lease is a three-way agreement between you (the employee), your employer and a finance company. It allows you to lease a vehicle and pay for it using a combination of your pre-tax and post-tax salary. Your employer deducts the lease payments directly from your pay, which reduces your taxable income and can result in significant savings.
Unlike a standard car loan, a novated lease bundles your vehicle’s running costs (including fuel, registration, insurance, tyres and servicing) into a single regular payment. This makes budgeting simpler and can deliver tax advantages that are not available through traditional car finance.
Novated leasing is available to employees of businesses of all sizes across Australia. Whether you are a full-time, part-time or contract employee, you may be eligible for a novated lease, provided your employer offers salary packaging.
Understanding how a novated lease works is straightforward once you see the three parties involved and how each benefits from the arrangement.
You select the car you want, whether it is new or used. There are no restrictions on make, model or whether you buy from a dealership or a private seller.
Your employer enters into a novated lease agreement with a finance provider on your behalf. Thor Finance helps you compare options across 45+ lenders to find the most competitive lease terms.
Your employer deducts the lease payments (including vehicle running costs) directly from your salary before tax is calculated. This reduces your taxable income and can lower the amount of income tax you pay.
You use the car as your own. The vehicle is registered in your name, and you choose where to get it serviced, where to fill up and which insurer to use.
When the lease term ends, you can choose to pay the residual value and own the car outright, trade it in and start a new novated lease, extend the existing lease, or sell or return the vehicle.
A novated lease offers several financial and practical advantages over traditional car finance. Here are the key benefits:
Because lease payments are deducted from your pre-tax salary, your taxable income is reduced. This means you pay less income tax, which can result in thousands of dollars in savings over the life of the lease.
When you acquire a vehicle through a novated lease, the GST on the purchase price is typically claimed by the finance provider, meaning you effectively pay less for the car upfront.
Fuel, registration, insurance, tyres, servicing and maintenance can all be included in your lease payments. This simplifies your budgeting and spreads costs evenly across the year, so there are no unexpected bills.
Most novated leases do not require a deposit, making it easier to get into a new car without a large upfront payment. However, you can choose to contribute a deposit if you prefer lower ongoing payments.
You are not limited to a specific brand, model or dealership. Whether you want a new car, a used car, a ute for work, or an electric vehicle, a novated lease gives you the freedom to choose.
Under current Australian Government policy, eligible electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) may be exempt from Fringe Benefits Tax (FBT) when leased through a novated arrangement. This can make EVs significantly more affordable.
If you change employers, your novated lease transfers to your new employer (provided they offer salary packaging). If your new employer does not offer salary packaging, you can continue making payments directly until your circumstances change.
Applying for a novated lease quote through Thor Finance does not affect your credit score. You can explore your options risk-free.
Choosing between a novated lease and a traditional car loan depends on your employment situation, tax position and personal preferences. Here is how they compare:
A novated lease is paid from your pre-tax salary (with some post-tax contributions), reducing your taxable income. A car loan is repaid from your after-tax income with no tax benefit on repayments.
Novated leases can bundle fuel, insurance, registration, servicing and maintenance into a single payment. With a car loan, you manage and pay for running costs separately.
With a novated lease, the GST on the vehicle purchase price is generally saved. Car loans include GST in the purchase price with no mechanism to recover it.
With a car loan, you own the vehicle from day one. With a novated lease, you take full ownership once the residual value is paid at the end of the lease term.
Novated leases require your employer to offer salary packaging. Car loans are available to anyone who meets the lender’s credit and income requirements.
Not sure which option is right for you? Thor Finance can help you compare both and determine which delivers the best outcome based on your specific circumstances.
Novated leasing is available to a wide range of Australian employees. You may be eligible if:
Novated leases are popular across a wide range of industries and professions, including healthcare workers, teachers, government employees, corporate professionals and tradespeople. If you are unsure whether your employer offers salary packaging, your Thor Finance broker can help you find out.
Note: Self-employed individuals and sole traders are generally not eligible for novated leases, as the arrangement requires an employer-employee relationship. If you are self-employed, Thor Finance offers a range of alternative finance options including low doc loans, asset finance and commercial loans.
One of the biggest advantages of a novated lease is the ability to bundle your vehicle’s running costs into a single payment. Costs that can typically be included are:
By bundling these expenses, you avoid the surprise of large, irregular bills and instead pay a consistent amount each pay cycle. Your Thor Finance broker will help you estimate these costs and build them into your lease package.
We are not tied to a single finance provider. Our panel of over 45 lenders means you get access to competitive rates and flexible terms that suit your individual circumstances.
95% of our applications are processed on the same day. Get a clear picture of your novated lease options quickly, so you can start shopping for your car with confidence.
Our brokers understand the ins and outs of novated leasing, including tax implications, FBT considerations and end-of-lease options. We guide you through every step of the process.
Our team knows which lenders are most receptive to low doc applications and which documentation combinations work best. This experience translates into faster approvals and better outcomes for you.
From choosing your vehicle to managing your lease and planning your end-of-lease options, Thor Finance is with you for the entire journey.
The Australian Government’s Electric Car Discount means that eligible electric vehicles and plug-in hybrid electric vehicles leased through a novated arrangement may be exempt from Fringe Benefits Tax (FBT). This makes novated leasing one of the most cost-effective ways to drive an EV in Australia.
Combined with the pre-tax salary deductions and bundled running costs of a standard novated lease, the FBT exemption can make an electric vehicle significantly more affordable than purchasing one outright or financing it through a traditional car loan.
Thor Finance can help you explore EV novated lease options, estimate your potential savings and find the right vehicle and finance package. Speak with one of our brokers to find out more.
Your novated lease transfers to your new employer if they offer salary packaging. If they do not, you can continue making payments directly from your personal bank account until you find an employer that does, or until the lease ends.
Yes. Novated leases are available for both new and used vehicles. The age and condition of the vehicle may affect the lease terms and residual value, but used cars are a common and practical choice for novated leasing.
The residual value (also called a balloon payment) is the amount remaining at the end of the lease term. It is set by the Australian Taxation Office (ATO) as a percentage of the vehicle’s original purchase price and decreases over the life of the lease. You can pay the residual to own the car, refinance it, or trade the car in.
For many Australian employees, a novated lease delivers meaningful tax savings, especially when running costs are bundled into the arrangement. The value depends on your income level, tax bracket, the vehicle you choose and whether your employer offers salary packaging. Thor Finance can run the numbers for your specific situation.
FBT may apply to a novated lease, but the Employee Contribution Method (ECM) can be used to reduce or eliminate FBT liability. Additionally, eligible electric vehicles may be fully exempt from FBT under current legislation. Your Thor Finance broker can explain how FBT applies to your situation.
Yes. Items such as roof racks, tow bars, dash cams, window tinting and other aftermarket accessories can often be included in the lease, allowing you to pay for them from your pre-tax salary.
Novated lease terms typically range from one to five years. The most common term is three to four years, balancing affordable repayments with a manageable residual value at the end of the lease.
The initial quote process with Thor Finance does not impact your credit score. A formal credit check is only conducted when you proceed with a full application through a specific lender.
Whether you are looking for your first novated lease or want to compare your renewal options, Thor Finance makes the process simple. Compare novated lease options from 45+ lenders, get same-day pre-approval and enjoy expert support from start to finish.
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