Fully Maintained Novated Lease

What is a Fully Maintained Novated Lease?

In my last post I described what a Novated Finance Lease is. A fully maintained novated lease is similar to that discussed in the last post except that the operating costs of the vehicle are included as part of the monthly lease payments. The types of things which can be included are registration, maintenance (including things like tires), and petrol.

This type of lease is normally offered by an external lease management provider. There are of course costs associated with this - their goal is a to make a profit after all. When I was shopping around some of the costs seemed quite high. My suggestion to you would be to shop around. Look for the best deal. And make sure you understand what you're getting into.

Don't be fooled by the tax benefits. Given the right circumstances, setting up this type of arrangement with your employer can be quite tax effective. This will depend on your income level, the type of car and the annual kilometers traveled among other things. But make sure you offset the leasing costs against these potential tax benefits. If the costs are too high, they may negate the tax benefits.

But if set up properly, a fully maintained novated lease can be quite beneficial. By salary packaging the operating costs of the car, you can save a significant amount of money.

It should also be noted that the lessor carries the risk of the residual value under a fully maintained novated lease.