Car Lease Perth

All the facts about a car lease Perth locals need to know – Your options, plus the many GST and tax savings.

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, updated on July 4th, 2023       

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Car Lease Perth

Car lease Perth - How it works

Leasing a car is different from some other forms of finance, primarily because you don’t own the vehicle during the agreement – but that does get you access to some amazing tax benefits. All leasing costs get based on the GST-free value of the vehicle and payments, plus the interest, are tax-deductible – which can save you thousands over the duration of the lease. You use the car for a specified period between one and five years. After that, you can either pay the residual amount and own the car, refinance the residual and extend the lease, or trade in the car and get another lease with similar or different conditions.

Finding the best Perth car lease deal

For most business users, choosing the best car finance option is about maximising any available opportunities to pay less tax and GST – and that’s where Savvy’s expert commercial finance consultants can help. Successful and cost-effective vehicle finance relies on you having as many options as possible and then picking the one that best suits your aims, your current situation, and your plans for the future. Here at Savvy, we partner with more than twenty-five specialist car lenders so that we can offer businesses and individuals the choices they need to identify opportunities to save and make an excellent car finance decision.

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Car lease Perth explained

Car Lease Perth: The Finance Lease

A finance lease offers massive GST and tax advantages. You choose the car you want, but the lender purchases it – claiming back the GST – so your repayments get based on the value of the vehicle less GST. It’s a huge benefit from the outset of the agreement, representing a GST saving of more than $6,000 on a $70,000 car, for example.

Not only that, but because a lease agreement doesn’t represent a contract of sale during the term, you can claim the repayments as an operating expense – including both the principal and interest portion. Over the course of a five-year car lease, that has a significant impact on taxable revenue.

Let’s say you’re looking for a car lease, Perth based, and your turnover is $!20,000 per year. You find a vehicle for $80,000 and decide on a five-year term with an interest rate of 6%.

Every repayment you make not only builds equity in the car; it also reduces your taxable revenue. Coupled with the initial GST saving, over the term of a car lease agreement, that all adds up to some serious savings.

  • Finance lease terms between 12 and 60 months with an option to extend further (residual refinance)
  • End of lease options allow you to purchase by paying the residual, refinance the residual and extend the lease, or trade the car in and begin a fresh lease
  • Each finance lease payment you make goes towards buying the car, increasing your equity

Car Lease Perth: The Operating Lease

Many Australian businesses and individuals use an operating lease because of their tax benefits and convenience. For commercial customers, operating leases present a chance to run presentable, reliable cars for anything between one and five years, and they essentially outsource administration, along with its considerable costs and time demands.

That’s because operating leases are a fully maintained way to finance any vehicle. For many business and private customers, including expenses like registration and insurance, car maintenance and servicing, and even insurance and fuel in the regular lease payment makes perfect sense. It’s called an operating lease for a reason – this type of finance bears huge cost benefits and productivity gains. Speak with a Savvy consultant about maximising your tax savings and tailoring different running costs to suit your specific operating requirements.

  • Tax-deductible repayments: Business users can claim costs as an operating expense
  • End of term options allow you to hand the vehicle back without charge or make an offer to buy the car

Commercial Car Lease Alternative: WA Chattel Mortgage Finance

Chattel Mortgage finance is a secured form of commercial lending, which basically means two things. Firstly, you get better interest rates because the lender’s risk is lower. Secondly, you own the vehicle from the start, but the finance provider retains an interest in the car until you make the last repayment.

  • Chattel mortgages have terms between twelve and eighty-four months.
  • Your car acts as collateral, keeping interest rates low.
  • You can adjust a chattel mortgage residual to manipulate repayment amounts if you choose, unlike with a car lease
  • All payments for the duration of the term are GST-exempt
  • The entire residual amount is also GST-free
  • The interest part of all repayments is tax-deductible
  • Business users get to claim depreciation on the vehicle, as per ATO guidelines
  • Registered businesses may claim GST on the full purchase price the next time they complete a business activity statement

Car Lease Perth Alternatives: Car Loans in Western Australia

For private car buyers who don’t have access to a salary sacrificing scheme and don’t want to lease a vehicle, car loans are the ideal finance choice. They’re a relatively simple way to buy a car, and their structure is much the same as a chattel mortgage. The risk to the lender is lower because your car acts as security until you make the final repayment, meaning lower interest rates.

You can buy new and used cars (up to age limits that differ between lenders)

  • Terms last between one and seven years
  • It’s OK to buy privately or from a vehicle dealer.
  • With a car loan, you can trade your old vehicle in, use a cash deposit, or borrow the full asking price of the vehicle you intend to buy.

Questions about a car lease Perth customers ask most often

How do I know my best car finance option?

Comparing car finance via Savvy is a great way to ensure you get the best deal out there. That’s because we have access to a significant number of lenders who operate in every business sector, and some excellent personal finance providers too. We’ll figure out which options and lenders suit you best so that you don’t have to do the legwork yourself.

Can I use a finance lease if I’m an employee?

Unfortunately, because finance and operating leases are commercial lending products, employees can’t access them. However, Savvy’s consultants can help you select from a broad range of lenders who offer competitive finance interest rates and terms for private car buyers.

Can I get a car loan with bad credit?

Savvy partners with a range of car finance lenders that consider applications from customers with past credit problems. Bad credit car loans run up to seven-year terms, and you’ll usually pay a slightly higher interest rate than with a standard car loan.

How long does a car lease in Perth run for?

Most car lease agreements run for between twelve months and five years, however, with some lease options (like finance leases and novated leases, you can extend the term to refinance the residual).

Is leasing cheaper in the long term?

This is a good question that anyone considering a car lease, Perth based, and wondering about the longer-term pros and cons should ask themselves. The answer – like so many questions connected with car finance – That depends on your priorities. If you like to drive the latest model cars all the time or have presentable business vehicles, then it’s a great option.

Over the long term, however, it works out more expensive when you chop and change cars more frequently. That’s partly because most depreciation occurs in the first few years after a car rolls out of the dealership. The majority of car lease Perth customers are looking to gain huge tax benefits, and some want the convenience of outsourced fleet management too.

Can I switch vehicles during a Perth car lease?

Unfortunately, you can’t. Lease contracts are pretty expensive to end early, and you’ll likely have to pay all the remaining lease payments, plus the residual to exit and change cars. It’s a better idea you commit to a shorter lease if you think your priorities might change mid-term.

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