Is My Novated Lease Quote Any Good?
A novated lease quote is only good if its total after-tax cost, including fees, running costs and the residual, beats a fair comparison with buying the same car outright or with a loan. Do not judge it by the provider’s tax-saving headline alone: enter the quote’s actual numbers into an independent model and check the net result.
What should I check on a novated lease quote?
Start with the fields that materially change the result. A quote can look cheap because it assumes generous running costs, a low finance rate, or a comparison that leaves out the residual.
Check the vehicle driveaway price, finance rate or monthly finance payment, lease term, residual percentage, administration fees, insurance, registration, servicing, tyres, energy or fuel, and the assumptions for salary and kilometres. Then confirm whether the employer actually supports the packaging arrangement.
- Vehicle price and dealer or broker margin
- Finance rate, establishment fees and administration fees
- Residual value and the date it falls due
- Whether running-cost budgets match what you would really spend
- Your salary, state, HELP debt and employer rules
What is the fair comparison?
Compare the same car over the same period. For buying outright, include the cash you spend on the vehicle and running costs, then account for the vehicle value you still own at the end. For a loan, include interest, fees, repayments and the end value. For the lease, include the after-tax pay impact, every fee, the residual and the end value or sale proceeds.
Why can a provider’s tax saving be misleading?
The tax saving is one component of the model, not a profit figure. Packaging also moves cash into a car, finance and running-cost budget. A high quote can show a large tax saving while still costing more than a cheaper car, a better finance rate, or buying outright. The comparison needs to include what you would have paid without the lease.
Worked example: the headline saving is not the answer
Suppose a $55,000 EV quote claims $13,000 of tax savings over three years. If the packaged deductions, provider fees and $25,784 residual leave you $41,500 out of pocket, compare that with the cost of buying the same car and paying the same insurance, registration, servicing and charging. The useful number is the difference between those two complete costs — not the $13,000 headline.
Common questions about this decision
Should I compare the weekly payment or the total cost?
Compare the total after-tax cost over the same term, including the residual and the value of the car at the end. Weekly cash flow matters for affordability, but it cannot tell you whether the quote is good by itself.
Can an independent calculator replace the provider quote?
No. Use an independent calculator as a second opinion. The provider’s formal quote contains the contract terms, while an independent model helps you test the assumptions and compare the result with other ways to buy the car.
Which primary sources support this guide?
Tax treatment changes. For the underlying rules, check the current Australian Taxation Office material before acting: