Novated Lease vs Car Loan – What’s Right for You?

1. What is a novated lease?

A novated lease is a three-way agreement between you, your employer, and a finance provider. Your employer makes the car payments on your behalf using your pre-tax salary.

It’s often advertised as a “tax-effective” way to get a car, but it’s not always the best option.

2. Pros and cons of novated leases

Pros:

• Payments come from your pre-tax income
• Often includes running costs (fuel, rego, servicing)

Cons:

• You must stay with your employer to keep the lease
• Limited car choice (often new vehicles only)
• Can be complex to manage
• Potential hidden fees and balloon payments

If you leave your job, you may be left responsible for the lease or required to pay it out.

3. How a car loan is different (and often better)

A car loan gives you full ownership of the vehicle from day one. It’s straightforward, flexible, and doesn't tie you to your employer.

Benefits of a car loan:

• Total freedom to choose the car you want (new or used)
• No employer involvement
• Fixed repayments with optional early payouts
• Easier to understand and manage

4. Which one suits you?

If you value flexibility, freedom of choice, and simplicity — a car loan is often the better long-term option.

While novated leases work for some, they’re not ideal for everyone, especially if you’re unsure about your employment situation or don’t want to be locked into a fixed agreement.

Need help deciding?

At Hanna Lending Services, we specialise in fast, tailored car finance — with no employer contracts or confusion.

👉 Get approved online in under 30 seconds or reach out for expert advice.

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