Car Lease Melbourne

More products from more lenders, more choice. Tax-effective car finance solutions and car lease Melbourne options.

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, updated on July 4th, 2023       

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Car Lease Melbourne

​Car Lease Melbourne – How it Works

Car leases are a cost-effective route to accessing the vehicle of your choice. The main advantage is in their tax savings. Car lease structures offer GST-free vehicle prices and all repayments are tax-deductible – when combined, those two factors can save you tens of thousands of dollars over the duration of a car lease. Melbourne businesses can access a few different products when it comes to leasing a vehicle, and there are alternatives too. Your end of lease options are extremely flexible, and finance terms run between one and five years.

Compare the best Melbourne car lease options

Comparing all your car finance options is easier than it sounds. There are hundreds of lenders out there, offering many types of vehicle finance product, and covering all your bases is impractical. Using a bank for car finance can be just as problematic because they only offer their own limited range of products – which isn’t great if you have specific needs, and doesn’t exactly promote competitive rates. Savvy makes shopping for car finance achievable, because we do the searching for you, and we’re with you every step of the way to help with your application.

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Car lease options explained

Finance Lease

A finance lease presents Victorian business owners with one of the most tax-friendly ways to buy a vehicle:

  • Repayments are tax-deductible
  • The vehicle purchase price is GST-free

A financial lease works in a similar way to an operating lease while the agreement is running. However, you get an extra end of lease option when compared to an operating lease. When the lease agreement finishes, you can pay the residual amount (which is based on the car’s depreciation during the term) and own the vehicle. If you’d rather extend the lease, you can refinance the residual and keep using the vehicle. If those two options don’t fit, you can sell or trade in the car by way of paying the residual and begin a new finance agreement.

  • Terms run from 12 months up to five years
  • Every time you make a payment, you accumulate equity in the car
  • End of lease options are buying, refinancing, selling, or trading the vehicle in
  • The payments and interest may be tax-deductible
  • The purchase price of the car is GST-free

Operating Lease

An operating lease comes with tax-deductible regular, fixed payments, so it’s the finance option of choice for many Melbourne businesses. Not only are the fixed payments easy to budget for, but you can also claim both the principal element and the interest portion of the monthly cost as a business expense. That makes for weighty savings over the course of several years. An operating lease is a fully maintained car finance option. That means businesses with more than one car essentially outsource all administration – but that works with just one vehicle too. Many larger companies use operating leases because they save costs and people hours; however, thousands of sole traders and private car buyers also use them. You can either hand the vehicle back when the term ends, or you can choose to buy. You get to include registration, servicing and maintenance, fuel, insurance, and breakdown cover in your repayments, or you can tailor what you bundle.

  • Terms range between 12 months and five years
  • Companies can outsource fleet management
  • Claim the payments as a business expense
  • At the end of the lease, you can negotiate to purchase the car or just hand it back

Chattel Mortgage - car lease alternative

Chattel mortgages represent an excellent alternative to car leases for some businesses. They’re a commercial finance product, so they’re not available to private buyers. Chattel mortgages have some unique and very cost-effective features, and they also have terrific GST benefits. Chattel mortgages are secured vehicle finance, and you own the car from the start of the agreement.

  • Businesses can claim back all the GST applied to the purchase price when they file their next business activity statement
  • All repayments are GST-free
  • The entire residual amount is GST-free
  • Businesses can claim the interest portion of all repayments
  • Businesses can also claim depreciation
  • Agreement terms run from 12 months up to seven years

The Pros and Cons of a Car Lease in Melbourne


Businesses don’t tie up valuable working capital in vehicles

Huge tax savings over the course of a lease agreement, with tax-deductible repayments

With a finance lease, businesses can buy a car without paying GST

Fully maintained packages minimise admin and maximise convenience


Businesses can’t claim depreciation on vehicles they don’t own

You can’t usually modify vehicles after they’ve been purchased

Operating lease deals may feature usage limits

Insurance requirements for leased vehicles are usually higher

Some of Your Most Frequent Car Lease Melbourne Questions

Can I lease a used car?

If you want to upgrade vehicles more frequently, completely offload the risks of ownership and disposal, and you’d benefit from bundling running costs and admin into the finance package, an operating lease is probably your ideal solution. Finance leases generally don’t include operating costs and administration, although the term durations are similar and even though there’s an obligation to pay the residual down, you can still upgrade your car at that point.

Can I claim depreciation with a car lease?

The outstanding financial benefits of using a car lease are connected with GST and tax. While you can’t claim depreciation, you can save tens of thousands of dollars over the course of a car lease term.

What are my bad credit car lease options?

It’s challenging to get a competitive car lease if you’ve got bad credit. Lenders operate based on risk. If you have a poor credit history, at best, that’s going to mean high car lease interest rates. Savvy works with lenders who offer competitive bad credit car finance, however. Because of the risk element, it’s often better to look past car leases and consider secured car loans or chattel mortgage finance. That’s because with both those methods, the lender uses your vehicle as collateral against your borrowing until you finish paying the loan back – and that keeps the risk and interest rates lower.

What’s a residual?

With a car lease, the residual gets set according to ATO rules and it’s based on the term of the lease. That’s because it’s there to account for the vehicle’s depreciation during the term. It’s why lease payments tend to be lower than with a straight car loan – because you only pay down the value of the car for the period you use it. The residual covers the rest from the lender’s point of view. It’s worth remembering, however, that chattel mortgages differ from a vehicle loan in that sense, and you get the same pay down benefit from a properly set residual as with a car lease.

Can I lease a car if my financials aren’t up to date?

If you’re waiting on your latest tax return or other financial records, Savvy’s consultants will likely direct you toward a low doc car finance solution, which is usually based on the chattel mortgage model and itself comes with some excellent tax advantages.

Why should I use a car finance broker?

Apart from the obvious advantage of canvasing a broader selection of lenders and products, Savvy’s expert car finance consultants can guide you through the car lease process, help with documentation and qualification requirements, and generally navigate applications more quickly. That means you jump fewer hoops and end up with more time to do what really matters– which is develop your business.

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