One of the perceived drawbacks of a standard novated lease is the lack of choice you have when it comes to your provider. This means you could be stuck with an unfavourable rate in some cases. For certain employees, though, a self-managed novated lease could be on the table to offer you the flexibility to choose your own finance, service providers and budget so you can ultimately save more money.
What is a self-managed novated lease?
A self-managed novated lease, also known as a BYO novated lease, is a salary packaging arrangement where you take on responsibility for managing your own vehicle running costs, rather than having this rest with your lease provider. This means you’ll need to be across each of the following:
- Organising finance for the vehicle
- Comparing and purchasing a comprehensive car insurance policy
- Paying your car’s registration and CTP insurance
- Keeping on top of your car’s servicing schedule
- Refuelling and claiming the cost/managing a limited fuel card
- Setting your overall weekly or fortnightly budget
- Reading through and signing all of the necessary paperwork
These expenses will still be bundled into your payments in the same way as a fully maintained novated lease. In terms of how it works, you can either handle all of this yourself or go through another provider who can essentially act as a broker.
This gives you access to a wider range of finance options and allows you to have all the budgeting and supporting material provided for you, allowing your employer’s provider to set up your deductions.
Who is a self-managed novated lease suitable for?
Self-managed novated leasing is generally only available to government employees or those working in large enterprises. If you’re working for a non-government or small business, you’ll likely only be able to choose between fully maintained and non-maintained if novated leasing is offered.
Self-managed vs fully maintained novated lease
| Self-managed | Fully maintained | |
|---|---|---|
| Lease payments deducted from pre-tax salary | Yes, partial or full depending on vehicle | Yes, partial or full depending on vehicle |
| Freedom to choose service providers | Yes | Subject to lease provider approval |
| Budget flexibility | Generally set by employee or their chosen lease provider | Guided by employer’s lease provider |
| Direct payment to maintenance/servicing providers | No | Yes |
| Running cost budget returned at end of term | Yes, if underspent | Yes, if underspent |
| Administration fees | Generally lower | Generally higher |
| Interest rates | Generally lower | Generally higher |
| Monthly lease payment | Lower | Higher |
| End of term options | Buy, sell, trade in or refinance | Buy, sell, trade in or refinance |
| Available to | Government and big business employees | All eligible employees whose businesses offer them |
The self-managed novated lease process with Savvy
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Work out your budget
Run the numbers on costs like your insurance, rego and maintenance. We can help you with this if you’re unsure.
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Find your car
If you don’t have an idea of what car you want yet, you can start looking for it or have us scan our dealer network.
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Fill out Savvy’s online form
Once you have all the information you need, simply fill out our online form so we can know more about you.
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Speak to an expert
You’ll get a call from a Savvy Benefits novated leasing professional to chat about your finance options and budget.
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Have your payroll sorted
We’ll work out your budget and provide the necessary documentation so it can all be set up for you.
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Start reaping the rewards
Once everything’s in place, you can enjoy your new car and tax savings.
Pros and cons of self-managed novated leases
Pros
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Greater savings potential
By surveying the market and choosing your own insurance, servicing and more, you can potentially cut back on expenses you would’ve been saddled with by your employer’s provider.
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Freedom to manage your own lease
Some will enjoy the greater sense of choice that a self-managed novated lease provides over a fully maintained one, as you can feel more in control of the arrangement.
Cons
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Not available to everyone
As mentioned, not all employees will have access to this type of novated lease, so even if you want one, it may simply not be an option.
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More labour-intensive
You’ll obviously need to put more time and effort into managing your lease this way than any other. Going through an alternative provider can help get around this issue.
Who calculates the running costs on a self-managed novated lease?
If you’re going it alone, you’ll need to be the one who crunches all the numbers on your novated lease so they can be handed over to your employer’s leasing provider. However, this is all done for you if you find your own provider to help you out. They’ll run the calculations and provide them to you so that you can pass them on to your employer and have everything implemented into your payroll.
