Understanding Common Questions About the Benefits of Novated Leasing
Novated leasing – also known as salary packaging a car – is a unique financial product that differs from traditional car loans.
And as one of Australia’s largest and most experienced novated leasing providers, Maxxia appreciates employees want a clear understanding of the benefits so they can move forward with confidence.
It’s why we’ve created this document, to answer our most asked questions, as well as mapping out some common scenarios to help employees feel confident that novated leasing is a great option.
Common novated leasing questions
Why should I choose a novated lease, and how is Maxxia any different to other providers?
A Maxxia novated lease offers not just a great new car but a packaged-up experience, including:
- Potential Tax Savings: Employees could save tax and make their money work for them by using pre-tax dollars to pay for a car.
- Budget Convenience: Year-round costs like insurance, registration, servicing, tyres, maintenance, fuel/charging and even car washes are bundled into one regular payroll deduction, simplifying vehicle ownership and avoiding bill-shock
- GST Benefits: Employees could save GST on the lease payment amount and eligible running costs.
- Fixed Repayment Stability: Unlike car loans, novated leases offer fixed repayments for the lease term, helping employees' budget with confidence.
- Fleet Discounts: Through a long-established nationwide network of dealers and partners, Maxxia can negotiate discounts on Australia’s most popular makes and models.
- Ongoing Support: From quote to delivery and throughout the lease, Maxxia provides dedicated support to help ensure employees get the best possible novated lease experience.
- Maintenance Team: Our team of experienced mechanics support you at service time, dealing with mechanics on your behalf to ensure costs are fair and reasonable.
By considering these bundled benefits, employees can better understand how novated leasing could suit their individual needs and lifestyle. Every situation is different, so we encourage employees to speak with a Maxxia consultant to explore their options and take the opportunity to ask questions.
Why does the novated lease interest rate seem higher than a car loan?
Novated leasing has many unique benefits.
That’s because it’s the only form of finance that allows pre-tax dollars to be put towards a car and its running costs.
This means employees could save tax on their repayments, as well as on big-ticket expenses such as insurance, registration, servicing, tyres and maintenance.
In addition, employees could benefit from:
- GST savings on the lease payment amount and eligible running costs
- Fixed repayments for budgeting certainty
- Fleet discounts driven by Maxxia’s longevity and buying power
Although the interest rate might look higher at first glance, once the included potential tax advantages are taken into account, a novated lease could work out to be more cost effective than a traditional car loan overall.
Am I financially disadvantaged by choosing a novated lease?
A novated lease can offer financial advantages that don’t apply to other forms of car finance, depending on individual circumstances. These can include:
- Potential tax savings on finance repayments and running costs
- Access to fleet discounts, and
- Simplified budgeting through bundling via bundled annual costs like insurance, registration, and servicing into one regular payment
Novated lease savings can vary, dependent on such factors such as salary, government benefits, vehicle choice, and usage. Because novated leasing is a personalised arrangement, Maxxia provides tailored quotes and guidance to help employees make a choice that fits their circumstances and needs.
Employees are encouraged to seek independent financial advice if they’re unsure, and Maxxia consultants are only too happy to walk through the details and answer any questions they might have.
Why do novated leases have a residual value (balloon payment)?
Novated leases are structured with a residual value, also known as a balloon payment, because of ATO guidelines. This payment is a required minimum amount based on the lease term (from 1 to 5 years) and reflects the vehicle’s expected market value at the end of the lease.
Employees have the following options when the lease ends:
- Pay the residual and own the car outright
- Refinance the residual and continue leasing the same vehicle
- Trade in or sell the car and use the proceeds to pay the residual, then you can upgrade to a newer vehicle.
Maxxia will contact employees as their lease draws to a close to talk through their options. Employees are also, as always, encouraged to seek independent financial advice to understand what option best suits their circumstances.
It’s important to note that residual payments must be made with post-tax dollars, and funds from the novated lease account cannot be used to pay the amount owed.
Do interest rate changes impact novated lease repayments?
Novated leases offer fixed repayments for the duration of the lease. This provides cost certainty and helps shield employees from future interest rate increases during the lease term.
What if I leave my company during the lease term?
If an employee leaves an organisation, they have several options available depending on their new circumstances:
- Transfer the lease to a new employer, if novated leasing is offered
- Convert the lease to a personal finance arrangement and continue making payments directly to the financier, in this instance all tax benefits will be lost
- Finalise the lease early, subject to the financier’s terms and conditions
Maxxia works directly with employees to support a smooth transition. Employees are encouraged to contact Maxxia as soon as they know they’ll be leaving, so we can chat through their options, and manage their account reconciliation (including Fringe Benefits Tax) appropriately.
It’s also recommended that employees seek independent financial advice to understand the best option for their situation.
Am I locked into a lease with no flexibility?
Not at all! Novated leases are designed to offer flexibility. Employees can choose lease terms (typically 1– to 5 years), select the vehicle type that suits their needs, and tailor inclusions such as insurance, tyres, servicing, and registration as part of their own budget.
At the end of the lease, employees have several options, including:
- Paying the residual value to own the car
- Refinancing the residual
- Upgrading to a new vehicle
Maxxia also provides digital tools including My Maxxia to help employees adjust budgets and track expenses in real time, making it easier to manage costs throughout the lease.
How does Maxxia ensure competitiveness and transparency?
As one of Australia’s largest novated lease providers with more than 35 years’ experience, Maxxia partners with multiple financiers and leverages its national buying power to deliver:
- Fleet discounts on a wide range of vehicles
- Streamlined approvals and consistent service across employers
- Transparent quoting with detailed breakdowns of costs and inclusions
- Dedicated maintenance team so you don’t pay for repairs you don’t need
- Personalised quotes with comparative options for peace of mind
- Digital tools to track budgets, manage expenses and access support
What support is available if I have questions or concerns?
Maxxia provides a range of support options to help employees understand and manage their novated lease:
- Dedicated consultants for support
- Online tools and calculators to model budgets and explore options
- Educational resources, including webinars and explainer guides
- Ongoing support throughout the lease term, including via the My Maxxia app, dedicated account management and customer service teams. Employees can also contact our Maintenance team, who will liaise with their mechanics at service time to ensure costs are fair and reasonable.
Employees are encouraged to reach out at any stage, from initial enquiry through to end of lease, to ensure they feel confident and informed.
Can I lease a second-hand or demo vehicle?
Yes. Maxxia supports novated leasing for used, demo, and near-new vehicles, provided they meet certain eligibility criteria. In fact, thousands of Maxxia customers across Australia choose second-hand cars for their novated lease each year.
Maxxia works with a network of dealers to source eligible vehicles and can also support leases for cars sourced privately. Generally, the vehicle should be no older than 12 years at the end of the lease term, though this may vary depending on your employer’s policy.
Leasing a used car could offer:
- Tax-saving potential
- Cost savings compared to new vehicles
- GST benefits on dealership-purchased cars
- Bundled running costs like insurance, fuel/charging, tyres, registration, and servicing
- Faster delivery times compared to new car orders
Maxxia consultants can help you understand how pricing and inclusions may differ from new cars and guide you through the process to ensure everything runs smoothly.
What happens if I exceed my budgeted running costs?
Maxxia provides digital tools – such as My Maxxia (available via app or online) – to help employees track their lease expenses in real time. If actual costs exceed the budgeted amount, Maxxia will contact the employee to discuss adjusting their regular payroll deductions to cover the difference. This helps avoid any lease liability while ensuring their lease account remains in good shape.
Employees are also encouraged to monitor their online statements. Our Customer Care Consultants can adjust the lease budget (up or down) to better reflect actual usage and costs.
Is novated leasing only for high-income earners?
Not at all. Because novated leasing allows you to put a portion of pre-tax dollars towards a car and its running costs, you could reduce your taxable income and increase your disposable income. The level of tax savings can vary depending on salary but a simple guide to novated leasing is this: if you pay income tax, you could save tax. It’s why novated leasing can benefit a wide range of employees, not just high-income earners. Many employees also find value in the convenience, budgeting support, and access to fleet discounts and GST savings.
Maxxia provides personalised quotes to help employees assess whether novated leasing suits their individual circumstances.
Can I lease an electric vehicle if I live in an apartment or don’t have a charger?
Yes. Many employees lease electric vehicles (EVs) EVs without having a home charger. Public charging stations and workplace infrastructure are commonly used alternatives, and Maxxia supports employees in exploring EV options that suit their lifestyle.
You can still claim charging costs through your novated lease using the invoice method, which allows reimbursement for electricity purchased at public stations. If you do charge at home, the shortcut method may apply, allowing you to claim a set rate per kilometre driven, even without a dedicated charger or smart meter.
Maxxia consultants can help you understand how charging access could impact your novated lease and guide you through your available options.
What happens if I want to exit the lease early?
While it’s possible to terminate your lease before the agreed end date, it’s important to understand that it may come with potential financial implications – which may include fees and charges imposed by the financier and the payout figure may be higher than the current market value of the vehicle.
Depending on your circumstances, options may include:
- Transferring the lease to a new employer (if they offer novated leasing)
- Converting the lease to a personal finance arrangement though any tax benefits of leasing will be lost.
- Finalising the lease early, subject to financier terms and conditions
Maxxia works closely with employees to support their end-of-lease needs. Employees are encouraged to contact Maxxia as early as possible to explore their options and understand any financial impacts.
How does novated leasing affect my borrowing capacity for a home loan?
Novated leasing will likely be considered a financial commitment by lenders. Because lease repayments are deducted from your salary, they may reduce your disposable income, which lenders assess when determining borrowing capacity.
The impact will vary depending on your income, lease structure, and the lender’s criteria. Employees are encouraged to seek independent financial advice to understand how a novated lease may affect their individual borrowing situation.
Can I lease my existing vehicle?
Yes. Through Maxxia’s Lifestyle Lease (formerly known as Sale & Leaseback), employees may be able to lease their current vehicle if it meets eligibility criteria.
This flexible arrangement allows you to unlock any equity in your car and access the benefits of novated leasing—such as potential tax and GST savings on running costs, bundled budgeting, and convenience—without needing to purchase a new vehicle.
Maxxia will work with you to:
- Determine an agreed value for your vehicle
- Pay off any existing finance (if applicable)
- Lease the car back to you through your employer
- Set up a fully maintained lease with bundled running costs
Your Maxxia consultant can help assess your vehicle’s suitability and guide you through the process to ensure everything runs smoothly.
Things you need to know:This general information doesn't take your personal circumstances into account. Please consider whether this information is right for you before making a decision and seek professional independent tax and financial advice. Conditions and fees apply, along with credit assessment criteria for lease and loan products. The availability of benefits is subject to your employer’s approval. Maxxia may pay and/or receive commissions in connection with its services.
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