Service Locator
October 26, 2017

Can You Change A Car Loan to a Novated Lease?

Often we have employees of client’s come to us and say they took out a car loan without knowing the tax advantages of novated lease were available to them and whether we can switch their finance over. It is possible, however can be an expensive option as there will be break costs for you on the car loan.


Operating like a ‘sale and leaseback’, what we look to do is pay the existing car loan out and then refinance it into a novated lease, including all of the running costs, to give you the maximum tax benefit. However, depending how recently the car loan was taken out, the payment can even be higher than what you paid for the vehicle initially due to interest and break costs. Consequently, lenders may not want to take on the additional ‘negative equity’ that would be in the lease initially.

If you are in the market for a new car it is best to explore all your options before committing to any finance method to ensure you choose the option that is right for your situation. 

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