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Answering all of your novated leasing questions.
Wondering what happens at the end of a novated lease? If your lease is wrapping up and you’re not sure what comes next, don’t stress – it’s simpler than you might think.
You’ve got three easy options: upgrade to a new car and start a fresh lease, refinance your current car and keep driving, or buy it outright. Whatever you choose, Smart takes care of the admin, so the process is totally hassle-free.
In this guide, we’ll walk you through how novated leasing works, the benefits, and what your options are when your lease comes to an end.
Thinking about a novated lease, but not sure how it works – or why it could be a smart move for your finances?
In a nutshell, novated leasing is a type of salary packaging, where you lease a car using part of your pre-tax salary. Here’s how it works, how you can save, and a few myths about novated leasing that we’d like to bust.
A novated lease is an agreement between you, your employer and a third party financier, with the leasing arrangements managed by a company like Smart.
You lease a car, and part of your repayments come out of your pre-tax salary, or all if your car is an eligible electric vehicle (EV)*. That reduces your total taxable income, which could mean you pay less tax overall.
Sound too good to be true? It’s not. It’s an ATO-approved leasing solution that could put more money in your pocket.
Your lease payments don’t just cover the cost of your car, either – they include running costs like insurance, servicing, tyres, maintenance, roadside assistance, fuel or charging, rego and CTP.
It’s all rolled into one simple payment that comes out of your salary on payday –which makes for much simpler budgeting. Want to find out how much you could save? Use our savings calculator.
Paying less tax isn’t the only way a novated lease could help you save.
The savings could start from the moment you choose your car.
With access to a network of more than 740 dealers, Smart can negotiate a competitive price on your behalf. Plus, you won’t pay GST on the purchase price – which means you’ll save 10% right off the bat^. Sound good?
That’s not all. Because many of your car’s running costs are paid from your pre-tax salary, you could also save on things like insurance, rego, fuel or charging, and servicing.
You could save even more if you lease an eligible EV*. That’s because 100% of your lease and car costs come from your before tax income and are exempt from fringe benefits tax with an eligible EV*, thanks to the federal government’s Electric Car Discount*.
But a novated lease isn't just about the savings – it’s also about convenience. With everything bundled into one regular payment that’s deducted from your pay, you’ll save time and effort. What’s not to love?
Let’s clear up a few common myths about novated leasing.
First up, novated leases aren’t just for brand new cars. You can take out a novated lease on a new or used car, or even your current car (yes, really)^^. You can also choose a lease term that suits you, from one to five years.
Many people think they can only use their car for work if they choose a novated lease. We’re here to tell you that’s not true. There aren’t any restrictions on how you use your car or who can drive it.
And you definitely don’t need to be on a high income to take advantage of a novated lease, either. Anyone can benefit from the savings and simplicity of a novated lease. So, what are you waiting for?
Wondering what happens at the end of a novated lease? You’re not alone – it’s one of the most common questions we get!
You’ve got three options: you can upgrade to a new car and start a new lease and our Vehicle Disposal Program can help you sell your current car. Or, you could refinance your current car and keep driving it. Or, if a novated lease no longer fits your needs, you can simply buy your car outright.
Here’s how each option works, so you can choose what’s best for you.
Love driving a new car every few years? With novated leasing, it’s easy to upgrade to a brand new model.
When your lease ends, you can choose a new car – and we’ll help you find it. Thanks to our nationwide dealer network, we’ll negotiate a competitive price and can even organise test drives if you want to take it for a spin first.
We can also help you sell your current car through our Vehicle Disposal Program, which can help you keep more in your pocket and make the transition simpler.
At the end of your lease, the residual amount is payable by you, but you may have the option to incorporate this amount into your new lease if you choose to upgrade your car.
If you’re not yet ready to part ways with your car, you can refinance your lease – and keep driving the car you know and love.
It’s a simple process, and you’ll continue enjoying the tax savings and convenience of bundled payments under a novated lease.
Better yet, because the car is older and you've already paid down part of the lease, your new lease payments may be less than the first time around – putting more money back in your pocket.
Want to keep your car for good? Good news: You can!
At the end of your lease, you have the option of buying the car outright by paying the residual amount owing – also known as a balloon or lump-sum payment. This is the car’s remaining value at the end of your lease, which is calculated according to ATO guidelines.
The longer your lease, the lower the residual value tends to be. Once you’ve paid it, the car is all yours – no strings attached.
Whether you’re weighing up a novated lease for the first time or nearing the end of your current one, it pays to know your options.
From how it works to what happens at the end of a novated lease, Smart is there to support you and help make the whole process totally seamless.
Got a question? We’ve got an answer.
This is general information only. Before entering into any salary packaging or novated leasing arrangement, you should consider your objectives, financial situation and needs, and obtain appropriate legal, tax, financial, or other professional advice based upon your own particular circumstances. This information is current as at September 2025.
^GST is not payable on the purchase price of a vehicle financed through a novated lease (GST savings are calculated on the FBT base value of the vehicle, up to the claimable limit [$6,334 in FY 2024-25] unless exempt).
*Fringe Benefits Tax (FBT) exemption available for eligible electric or hydrogen cell vehicles purchased through a novated lease up to the Luxury Car Tax limit ($91,387 in FY 2024-25). Plug-in Hybrid Electric Vehicles with leases commencing from 1 April 2025 are not eligible for this exemption
^^ To package a used or current car, certain financier requirements must be met. Exact age requirements and minimum value depend on which financier you choose. Generally, vehicles should be less than 12 years old at the end of the lease term with a minimum value of $5,000.