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Risks and exit strategies

Novated leases are usually discussed in terms of tax savings, interest rates, and take-home pay.

What is discussed far less — and often glossed over in marketing material — is risk.

A novated lease is not just a way to finance a car. It is a multi-year contractual arrangement that ties together your employment, tax position, and a depreciating asset. When everything goes to plan, particularly for FBT-exempt EVs, the outcome can be very favourable.

When things don’t go to plan, the downside can be sudden and asymmetric.

Common risk scenarios include:

  • job loss or redundancy,
  • changing employers who do not support novated leasing,
  • unpaid or extended leave,
  • vehicle write-off where insurance does not fully cover the payout,
  • policy changes (such as the EV FBT exemption ending).

In these situations, the same lease that looked attractive on a fortnightly cashflow basis can turn into a large post-tax lump-sum obligation, often without the tax benefits that justified the arrangement in the first place.

This section focuses on:

This section is not an exhaustive list of all caveats of novated lease; other potential caveats are discussed in "Is a novated lease right for me" article.

If earlier sections ask “Is a novated lease cheaper?”, this section asks another important question:

“What happens if circumstances change — and am I comfortable with that risk?”

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