What You Need To Know About Changing Jobs With A Novated Car Lease

By Ben Markovic

Switching jobs is a major life shakeup, especially when you have a car lease hanging in the balance. If you’re contemplating a career move and wondering what happens to your leased vehicle, you’ve come to the right place.

At GO Salary, we aim to bring clarity to complex scenarios, and changing jobs while on a novated lease is a topic deserving of a deep dive. Today, we’ll walk you through the ins and outs of this complicated issue and explain your options.

What is a Novated Car Lease?

Firstly, let’s quickly recap what a novated car lease is, and how they work. Put simply, it’s an agreement between you, your employer, and a finance company, which allows you to lease a vehicle using your pre-tax income. This has a few benefits for you, most notably being that as you’re making payments to your car with pre-tax dollars, you’ll be paying less tax.

Novated lease arrangements also allow you to pay for running costs such as servicing, fuel, car washes, insurance, registration and more. These are all bundled into your lease payments each pay cycle, making novated leasing an easy way to budget and manage a vehicle. Plus, there can be GST savings as well as income tax savings. Learn more here.

Understanding Your Novated Lease Agreement

Before making any career-related decisions, it’s crucial to thoroughly review your car lease agreement (also known as a ‘novation agreement’). This contract will spell out the conditions under which you can exit or transfer the lease, and it will likely have provisions for situations like changing jobs. Having a complete understanding of your obligations and options is the first step in making an informed decision.

The Big Question – Can I Keep My Novated Lease if I Change Jobs?

The short answer is: Yes! If your new employer supports novated leases and is willing to take on the arrangement, a transfer is possible and relatively simple, allowing you to continue to enjoy the benefits of a novated lease with no interruptions. There is also the potential to have the taxable value of the car reevaluated at a new employer, which might deliver further tax benefits.

But don’t worry – if your new employer doesn’t support novated leases, you still have options. If you have sufficient funds to spare, you can simply pay out the remaining amount owing on the lease and take full ownership of the vehicle. Your lease may have fees or penalties associated with early termination, so you should consult your lease provider beforehand to ensure you have a full understanding of the situation.

If that’s not an option, you can switch the lease to a personal one, paying the lease and running costs as a traditional car loan. In this scenario, you would become solely responsible for the financial obligations associated with the lease, so we’d recommend consulting a financial advisor before making a decision.

Making an Informed Decision

Navigating the complexities of a car lease while changing jobs can be daunting, but it’s far from impossible. By understanding your lease agreement and evaluating your options carefully, you can make a decision that aligns with both your career ambitions and your financial realities. And as always, GO Salary is here to provide expert advice and support tailored to your unique circumstances. For any questions, or to begin your novated lease journey, contact Go Salary today.

Frequently Asked Questions

What happens to my lease payments if I change jobs?

If you can’t transfer your lease to your new employer, you will likely be responsible for making the remaining lease payments yourself.

Do I have to pay a penalty if I terminate my lease early?

Most likely, yes. Early termination usually incurs a penalty, the size of which should be outlined in your lease agreement.

Can I transfer my lease to a friend or family member?

This depends on the terms of your lease agreement. Some contracts allow for this, although the person you transfer the lease to will typically have to meet certain credit and income criteria.

What are the tax implications of changing a job on a car lease?

If your new job doesn’t offer salary packaging, the tax benefits you were enjoying on your lease payments may cease. This could, in effect, make your lease more expensive. If your new employer does offer novated leasing, there might be the option to have the taxable value of your car reassessed, which can prove beneficial.