Chattel Mortgage Car Loans
A Chattel Mortgage is a commercial finance product that is commonly used by businesses to finance a vehicle.
A Novated Lease is an agreement between an employee, their employer and a lender. This option is suitable for employees who want to finance their vehicle as part of their salary package.
Disclaimer: The information provided is general in nature and does not take into account your personal financial situation. Rapid Finance is qualified to provide credit assistance but is not a licensed tax advisor or accountant. We recommend seeking advice from a qualified accountant or financial professional to understand the full tax implications of a novated lease for your circumstances.
A Novated Lease is a three-way agreement between a lender, employer, and employee. Under a Novated Lease, the employee leases a vehicle, and the employer deducts the lease payments from the employee’s pre-tax salary through salary sacrificing.
Under this arrangement, the employer makes lease payments on behalf of the employee. Using a combination of pre-tax and post-tax salary, reducing the employee’s taxable income. This setup is particularly popular among salaried employees. As it provides tax-effective ways to finance a vehicle while enjoying the benefits of salary packaging.
If the employee changes jobs, they typically take the lease with them, or they may need to renegotiate terms. While novated leases offer tax savings and budgeting convenience, they also come with financial commitments, and employees should carefully assess whether this option aligns with their financial situation and long-term needs.
A novated lease is a smart way to finance a car through your salary. It’s a three-way agreement between you (the employee), your employer, and a leasing company. Instead of taking out a personal loan, your employer deducts lease payments directly from your salary – using a mix of pre-tax and post-tax income. This can reduce your taxable income, saving you money while keeping car costs simple and predictable.
At the end of the lease, you can generally choose to upgrade, refinance, or pay the remaining amount (called the residual) to own the car outright.
A novated lease offers plenty of benefits for employees, including:
Novated leases aren’t just great for employees – they also offer benefits for employers:
Disclaimer: The information provided is general in nature and does not take into account your personal financial situation. Rapid Finance is qualified to provide credit assistance but is not a licensed tax advisor or accountant. We recommend seeking advice from a qualified accountant or financial professional to understand the full tax implications of a novated lease for your circumstances.
A traditional car loan requires you to take out finance in your name, with repayments made from your after-tax income. In contrast, a novated lease lets you bundle car purchase costs into your salary package, reducing your taxable income and potentially saving on tax. With a car loan, you own the vehicle outright (subject to loan repayments), while with a novated lease, ownership options depend on the lease terms.
A novated lease could reduce your taxable income since lease payments are deducted from your salary before tax. Additionally, you could save on GST because the leasing company claims it on the vehicle purchase price. Some lease structures also help reduce Fringe Benefits Tax (FBT) liability through post-tax contributions.
Most novated lease providers allow you to choose a new or used vehicle, subject to lender conditions. However, some restrictions may apply based on the car’s age, type, and value. Speak to Rapid Finance to find out what options are available.
Yes, some providers allow used cars in a novated lease, but restrictions may apply on the car’s age, condition, and value. Rapid Finance could help you find a lease option that fits your vehicle choice.
Yes, a credit check is usually required since a novated lease is a form of finance. Leasing companies assess your creditworthiness to determine approval and interest rates. However, some providers may offer flexible options depending on your financial circumstances.
Having bad credit doesn’t always mean you’ll be declined.
Rapid Finance specialises in finding finance solutions for people with different credit backgrounds. If you’ve had past credit issues, we can explore options that suit your situation.
Novated leases are typically designed for employees receiving a salary from an employer. If you’re self-employed, other finance options, like chattel mortgages or business car loans, may be more suitable. Rapid Finance could help you find the right solution for your needs.
Yes. When you buy a car under a novated lease, the leasing company claims the GST on the purchase price, meaning you effectively save 10% on the cost of the car.
A novated lease reduces your taxable income, meaning you may pay less tax overall. However, since lease payments come from your salary, it does impact your take-home pay. The actual effect depends on your salary, lease amount, and tax bracket.
Yes, in many cases, your novated lease can be transferred if your new employer offers salary packaging. If they don’t, you may need to restructure the lease or take over payments personally. Check with your leasing provider for transfer conditions.
If you leave your job, your novated lease doesn’t automatically end. You usually have the option to:
Rapid Finance could help you explore your options based on your situation.
Yes, you could pay out a novated lease early, but early termination fees may apply. The payout amount will include the remaining lease balance and residual value. Contact us to explore your best options.
At the end of the lease, you typically have three options:
We could help you decide the best option based on your circumstances.
With a Fully Maintained Novated Lease, your vehicle's operational costs are included in your salary package. This includes repayment costs, vehicle registration, insurance and petrol. Costs associated with upkeep and maintenance, like servicing or replacement of tyres are also included.
With a Non-Maintained Novated Lease, only the repayment costs are included in the employee's salary package. All other vehicle maintenance and running costs are paid out of the employee's post-tax income. For more information on Fully Maintained and Non-Maintained Finance Leases, speak to a Rapid Finance loan specialist.
Disclaimer: The information provided is general in nature and does not take into account your personal financial situation. Rapid Finance is qualified to provide credit assistance but is not a licensed tax advisor or accountant. We recommend seeking advice from a qualified accountant or financial professional to understand the full tax implications of a novated lease for your circumstances.
A Chattel Mortgage is a commercial finance product that is commonly used by businesses to finance a vehicle.
Rapid Finance could recommend and find car loans for a range of business needs - often with tax benefits.
A Novated Lease is a type of car finance for employees who want to purchase a vehicle as part of their salary package. Under a Novation Lease, there are three people who must come together to initiate the loan, and two documents that must be signed.