Fully Maintained Novated Lease
Remove the hassle of owning a vehicle and reduce your tax bill.
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Fully Maintained Novated Lease
Fully maintained novated lease for cars
If your employer offers salary packaging, you might be able to run a car while saving big on tax. Imagine bundling all the significant annual costs of motoring into one affordable monthly payment and paying out of your pre-tax wages – that’s basically a fully maintained novated lease. You buy before you get taxed, so you save money. With a fully maintained novated lease, there’s no more dreading that substantial annual registration bill. You can say goodbye to haggling with tyre fitters or mechanics, and forget the pain of yearly insurance renewals and price hikes too. A fully maintained novated lease takes care of everything. You just pay a fixed, regular cost.
How does Savvy help?
With any form of vehicle finance, competition is the quickest route to lower interest rates and charges. After all, you wouldn’t simply accept the first price for a new vehicle down at the car yard – you’d shop around before buying a vehicle, and car finance costs are no different. The trouble with finance is that shopping around can get complicated. There are many Australian lenders and products to choose from, some reputable, some not. It’s difficult to know where to start and impossible to be sure you’re getting the best deal. That’s where Savvy comes in. We help thousands of Australians get their ideal fully maintained novated car lease each year – and we do the legwork for you!
Why choose Savvy for a fully maintained novated lease?
More Lenders = More Savings
Less Legwork, Fewer Headaches
Get Back on the Road Quicker
Savvy’s Fully Maintained Novated Lease faqs
What gets included in a fully maintained novated lease?
As well as the finance for your new car, fully maintained novated lease payments usually include vehicle registration costs, insurance premiums, tyre replacements, plus all scheduled servicing and maintenance, as well as fuel. There may be some restrictions on where servicing, fuelling, and maintenance get carried out because lease companies often negotiate bulk pricing deals – but that also works out cheaper for you. Some novated lease providers will also allow you to include breakdown cover in the agreement, and you get the full benefit of the vehicle warranty too.
How do I know I’m getting the best fully maintained novated lease deal?
Savvy works with more than twenty-five top financiers in order to find Australians the best deals for car leases and personal finance. We partner with a diverse range of lenders from wholesale car lease financiers to niche luxury vehicle suppliers. We’ll only ever match you with an operator in the field you’re considering. Novated leasing is a highly specialised option used by thousands of employees. It’s not your standard lease, there’s a finance element to the service, but also the salary packaging side, and not all financial institutions or lenders offer a salary sacrifice option. Sourcing a novated lease is quicker, cheaper, and simpler with Savvy because we’ll direct you only to lenders that provide the right product.
Who owns a novated lease car during the lease term?
The lender owns the car until the lease term ends and the residual is paid out, and then you get a clear title on the vehicle. At that point, you’re free to keep driving the vehicle, or you can sell it and start another lease for a newer model.
Is a fully maintained novated lease worth it?
Usually, yes, it’s worth bundling at least some of the running costs of a vehicle. Novated leases provide excellent tax savings, whether you include running costs or not. However, with a fully maintained version, you’ll also access lower servicing and associated motoring expenses. That’s a benefit of sourcing more than just the car via a large lease provider – they negotiate far better prices than if you approach garages yourself because they buy and service many vehicles every year. Buying power rules in any industry and car servicing, tyre providers, and insurance companies are no different. Let’s examine two examples:
Income tax and a non maintained novated car lease
Let’s say you earn $55,000 per year before tax, so you’re in the 32.5% tax bracket. You decide to get a novated lease for a Holden Calais V Wagon, which costs $53,990. Your finance term is four years with a 6% interest rate and the residual amount, as per ATO guidelines, is 37% of the drive away price, which works out at $19,976.
| Earnings ($) | Tax Rate | Tax Payable | Tax Bill without Salary Sacrifice Car | Tax Bill with Salary Sacrifice Car |
|---|---|---|---|---|
|
0-18,200 |
0% |
Zero |
|
|
|
18,201-45,000 |
19% |
19% on everything over $18,200 |
|
$4,944 |
|
45,001 - 120,000 |
32.5% |
32.5% on everything over $45,000 plus $5,092 |
$8,342 |
|
Your monthly payments will be $899 and that reduces your taxable income by $10,778 each year the agreement runs – and you drop into the lower tax band, paying just 19%. Instead of forking out $8,342 in tax, your novated lease means your yearly tax bill gets cut to just $4,944 – which is an immediate income tax saving of almost $3,500
Income tax and a fully maintained novated car lease
Now, let’s look at the benefit to be gained from getting a fully maintained novated lease for the same car, using the same interest rate and residual value. In this example, instead of just paying for the finance element of the lease, you’ll add just fuel and servicing costs – but you could also include insurance, registration, breakdown cover, tyres and general maintenance too. Autoguru.com.au estimate the annual servicing costs on a Holden Calais to be $574. Fuel for the year gets listed at $1,964 – but, obviously, that could increase if you do a lot of driving. That totals $2,538 annually. Let’s see what bundling that cost into a fully maintained novated lease does for your tax bill.
| Earnings ($) | Tax Rate | Tax Payable | Annual Servicing & Fuel Costs | Tax Bill with Fully Maintained Lease |
|---|---|---|---|---|
|
18,201-45,000 |
19% |
19% on everything over $18,200 |
$2,538 |
$4,461 |
Do I have to use my car for work to access a fully maintained novated lease?
You don’t have to use your new vehicle for work-related activities at all with a novated lease. The tax benefits of a novated lease aren’t related to business or work. The ATO fully approves of salary sacrificing, and it’s an excellent way for employers to incentivise staff. That means you can use your salary sacrifice car like any privately owned vehicle. Whereas chattel mortgage and commercial car leases offer business users tax incentives in their own right, novated leases provide private vehicle buyers with a huge GST saving when the lender buys the car and income tax savings throughout the course of the agreement – but that doesn’t require the car to get used for work or business.
How do I make fully maintained novated lease payments?
You don’t even need to make repayments with a novated lease. Because you’re in a three-way agreement, your employer takes full responsibility for deducting the payments from your salary so that you can relax and just get on with enjoying your new car.
The pros and cons of fully maintained novated lease
PROS
Even more income tax savings
 Adding all the running costs of your vehicle to the price of your novated lease means you end up with even less taxable income. That’s because all the fuelling, registration, insurance, and breakdown cover add up over the course of a vehicle finance agreement. A fully maintained novated lease allows you to bundle all those things up into one easy regular payment – which comes out of your pre-tax earnings, reducing your taxable income even further than if you just pay for the car finance element that way.
Fixed payments as opposed to unexpected bills
 Even the newest vehicles can encounter mechanical problems and require major services at intervals during their first few years on the road. It’s essential to keep up with servicing schedules if your car is going to retain its resale value and stay in tiptop condition. Fully maintained novated leases bundle up servicing costs, any required unscheduled repairs, and regular maintenance like tyres into your monthly lease payment – making motoring easier to budget for.
You’re tied into the lender’s servicing suppliers
 With a fully maintained novated lease, the lender negotiates their own servicing arrangements, often limits the purchase of fuel to one particular supplier, and even things like new tyres will have to come from a specific retailer. While you’ll usually benefit from the lender’s lower negotiated rates, you’ll also get less freedom in terms of where you take a vehicle for repairs and maintenance. It’s essential to check their list of suppliers fits with the outlets near where you live.
CONS
You might fall foul of Fringe Benefits Tax (FBT)
 It’s essential to weigh up your options. The total cost of your novated lease can influence your FBT liability, and you may wish to pay some of your running costs with post-tax pay instead. It’s important to tailor your novated lease to your specific circumstances and everyone is slightly different. You can pick and choose which running costs you pay from pre-tax earnings to maximise your savings – then pay for the rest from your net salary. That sounds a little complicated, but that’s what salary sacrificing companies to for you, and a Savvy consultant can help advise your best way forward.
Cheaper servicing and maintenance
Anybody who’s owned a car knows that mechanics don’t come cheap. Over the lifetime of a car, a significant portion of the cost comes down to servicing and maintenance. When you buy a vehicle using a novated lease, you’re also getting access to the lease provider’s considerable buying power. Novated lease lenders purchase thousands of cars every year, and they negotiate great rates for mechanical services, so it’s way cheaper to look after a car when your novated lease provider settles up with the garage.
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