Car Lease Perth

All the facts about car leases Perth locals need to know: your options, plus the many GST and tax savings. Get started with Savvy today!

Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
Our authors
, updated on May 24th, 2024       

Fact checked

At Savvy, we are committed to providing accurate information. Our content undergoes a rigorous process of fact-checking before it is published. Learn more about our editorial policy.

Car Lease Banner - Businesswoman smiling while driving her car

Leasing a car as a Perth business is different from some other forms of finance, primarily because you don’t own the vehicle during the agreement. However, you do gain access to some handy tax benefits in the process. For instance, all leasing costs are based on the GST-free value of the vehicle and payments are tax-deductible – which can save you thousands over the duration of the lease.

For most business users, choosing the best available car finance option is about determining which is the most tax and cost-effective for them, which is where Savvy’s expert finance consultants can help. We’re partnered with a range of commercial finance companies to offer businesses and individuals the choices they need to identify opportunities to save and make an excellent car finance decision. Whether you’re in Perth or anywhere else in WA, get a free, no-obligation quote today!

How do car leases work for Perth businesses?

Under a car lease agreement, you’ll gain access to the car for a specified period between one and five years. After that, depending on the type of lease you have, you can either pay the residual amount and own the car, refinance the residual and extend the lease, trade in the car and get another lease with similar or different conditions or simply hand back the car.

There are also several key tax benefits to consider for commercial leases. As mentioned, the GST on the purchase of the car is able to be claimed by your leasing company and passed on as savings to you. Furthermore, your car lease payments are entirely tax-deductible for the business portion of the vehicle’s usage. This means that if you use the car for private purposes about a quarter of the time, you can claim around 75% of your vehicle’s payment.

When it comes to car leases, there are several products you can choose from. These include:

Finance leases

A finance lease can offer attractive tax advantages. As mentioned, the GST deduction is 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 can have a significant impact on taxable revenue.

Let’s say you’re looking for a car lease, Perth-based and your turnover is $120,000 per year. You find a vehicle for $80,000 and decide on a five-year term with an interest rate of 6% p.a. Every repayment you make 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.

End of lease options allow you to purchase by paying the residual, refinance the residual and extend the lease or sell or trade the car in and begin a fresh lease. Additionally, on-road costs like registration, insurance and servicing will have to be organised by you.

Operating leases

Many Australian businesses and individuals use operating leases 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.

The other big difference comes in its end of term options: rather than having to deal with a residual, this type of lease allows you to hand the vehicle back without charge or make an offer to buy the car.

Novated leases

A different type of lease available is a novated lease. Unlike the other two mentioned so far, novated leasing is an arrangement designed for employees, rather than business owners. It involves three parties: you, your employer and your leasing company. The company buys the car and leases it to your employer, who then gives it to you.

The primary benefit of novated leasing is tax-related: the lease payments are deducted from your pre-tax income by your employer, which is known as salary sacrificing. This means the income tax you’re liable to pay is reduced despite paying the same amount. If you opt for a fully maintained novated lease (on-road costs included) over a non-maintained lease, these can help reduce your taxable income further.

However, it’s worth noting that novated leases can attract the Fringe Benefits Tax (FBT), which is charged on benefits provided to employees by their employers outside their normal salary. This could cost thousands of dollars extra, unless you make post-tax contributions using the Employee Contribution Method (ECM).

Perth commercial car lease alternative: chattel mortgage

Chattel mortgages are a secured form of commercial lending. The key difference here is that you as a business own the vehicle from the start, but the finance provider retains an interest in the car until you make the last repayment. Here’s how they work:

  • Chattel mortgages can come with terms between 12 months and seven years.
  • Your car acts as collateral, meaning it could be repossessed if you fail to repay your loan but adding extra security to the agreement (and reducing interest rates in the process).
  • You can adjust a chattel mortgage residual to reduce the cost of your repayments if you choose, unlike with a car lease (which are set by the ATO). However, residuals will increase the interest you pay overall.
  • GST is claimable on the purchase price of the vehicle, as well as the interest on your repayments and depreciation of the vehicle (all claimable for the business portion of its usage).

Perth commercial car lease alternative: car loans

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 primary choice in Perth. They’re a relatively simple way to buy a car, and their structure is much the same as a chattel mortgage but without the tax benefits. Like chattel mortgages, your car will remain as collateral for the loan until the end of your term. The key factors about car loans include:

  • Terms last between one and seven years
  • You can buy new and used cars from dealers, private sellers or auctions, provided they satisfy your lender’s criteria (age limits can reach up to 20 to 25 years with some lenders, while others may not have an age limit in certain circumstances)
  • With a car loan, you can trade your old vehicle in, use a cash deposit, or borrow as much as the full asking price of the vehicle you intend to buy.
  • You own the car from the beginning of your loan term.

If you’re looking to take out a car loan for yourself or your business, you can get a free, no-obligation quote with Savvy today!

Why choose Savvy for your Perth car lease?

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 help you choose the best deal available for your needs with confidence. That’s because we have access to a significant number of finance companies who operate in every business sector, and some excellent personal finance providers too. We’ll figure out which options and lenders suit you so 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, novated leasing may be an option for you if your business offers it. Additionally, 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 – depends on your priorities. If you like to drive the latest model cars all the time or have presentable business vehicles, it’s a more viable option than buying and selling cars.

Over the long term, however, it works out to be 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?

Yes – however, lease contracts can 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. If you're unsure about whether you want to stick the lease out, it may be worth starting with a shorter term and reassessing your options once it's completed.

Does my leased car have to be in Perth?

No – regardless of where your vehicle is located, you can arrange for the lease to be completed. If your car is up north or interstate, you may even be able to have it shipped to you.

Brands you can trust

anz logo
Plenti logo
liberty logo
finance one logo
wisr logo
firstmac logo
Macquarie logo
Now Finance Logo
SocietyOne
logo money3
Commonwealth Bank logo
Capital finance logo
Moula logo
prospa logo
BOQ logo
Angle Finance Logo
Westpac Logo
liberty logo
finance one logo
logo money3
firstmac logo
Now Finance Logo
Dynamoney
Westpac car insurance
Capital finance logo
Moula logo
prospa logo
Angle Finance Logo

Helpful guides on car loans

Man driving his car for work

Car Allowances Explained

Car allowances are a perk offered by some Australian employers, giving employees a helping hand with their car expenses. This...

Car Loans Banner - SUV parked in a field at sunset

The 5 Best SUVs in Australia in 2024

SUVs have become the undeniable kings of the Australian road. Their versatility, spaciousness and rugged capabilities cater to our diverse...

Car battery being installed in car

How Long Does a Car Battery Last?

A battery is essential to your car’s functionality, providing the necessary power to start the engine, operate lights and accessories,...