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What’s the smarter way to drive a new car? Call 1300 476 278 for a novated leasing quote.
A novated lease is one of the most tax-effective, hassle-free ways to get into a new car. If your employer allows it, you could take advantage of its benefits.
A novated lease is a three-way agreement between you, your employer, and a finance company, with a company like Smart doing the legwork for you. You choose the car you want, and your employer makes the lease payments, which includes your running costs, using a portion of your pre-tax salary. This could lead to big income tax savings.
A traditional car loan on the other hand is paid for using only your post-tax income and does not give you the same income tax savings.
Trying to decide which option gives you more value over time and the greatest convenience?
Here’s how novated leasing with Smart™ stacks up against traditional car finance.
|
Considerations |
Novated Lease |
Traditional Car Loan / Finance |
| Upfront cost | Low, no lump sum needed |
Deposit often required |
| Tax Benefits | Payment made from pre-tax salary |
No income tax benefits |
| Budgeting Ease | One regular payment with usual car expenses included |
Multiple bills |
| Running Costs | Includes rego, insurance, servicing and maintenance |
Paid separately at different and often unexpected times of the year |
| Vehicle Choice | You choose – new or used* |
You choose – new or used |
| Personal Use | Yes, car can be for 100% personal use |
Depends on the agreement |
| Admin & Paperwork | Managed for you by Smart & your employer |
You manage everything |
| Flexibility to Upgrade your Car | Often easier to upgrade at end of lease |
Depends on loan terms |
| This comparison table is intended as a general guide only and does not constitute financial advice. | ||
Buying outright ties up your cash and means you miss out on the tax savings you could achieve with a novated lease.
A novated lease can let you keep your money working elsewhere, reduce your taxable income and cover running costs in one convenient, regular payment.
To show how much you could save, let’s look at a real-world example. Based on a Tesla Model Y Rear wheel with an RRP of $64,120 we compared the totals costs of a novated lease versus a traditional car loan over a 5-year term. The Tesla Model Y is eligible for a Fringe Benefits Tax exemption on a novated lease~.
The result? The novated lease came out $28,504 cheaper - and that includes running costs like insurance, registration, servicing and maintenance.
This example highlights how bundling expenses and accessing pre-tax benefits can lead to significant savings over time.
Visit Smart FAQs for more answers
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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 October 2025.
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.
^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 2025-26] unless exempt).
1 Total cost over life, where life represents 5-years. All calculations based on the following assumptions: living in NSW 2000, salary: $90,000 gross p.a., travelling 15,000 kms p.a., lease term: 60 months. Figures quoted include budgets for finance, fuel, servicing, tyres, maintenance, Vero by Suncorp comprehensive motor insurance and re-registration. Novated lease calculations: using Net GST processing method and Employee Contribution Method for FBT purposes; the total cost over life reflects the net effect after tax and includes an average Smart admin fee; the Smart buying power discount varies by vehicle and is subject to change; residual value is $18,133 including GST at the end of the lease term (the vehicle can be sold or re-leased to payout the residual at end of the lease term). ’Traditional Car Loan’ figures are calculated based on a 7.71% comparison rate. Comparison rate is based on the advertised secured fixed rate car loan comparison rate of a major Australian Bank in October 2025 . Vehicle pricing and finance rates are correct as of October 2025 and may be subject to change
~ 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 2025-26). See the Australian Taxation Office website for full eligibility criteria