Buying a car in 2026 comes with one big question: is a novated lease cheaper than buying outright? With rising car prices, higher insurance premiums and a growing interest in electric vehicles, more Australians are turning to Google to ask “is a novated lease worth it?”
Here’s the simple answer: it depends on your income, the car you choose and how you plan to use it – but for many Aussies a novated lease often works out significantly cheaper thanks to tax savings, bundled running costs and fixed budgeting.
Below, we’ll break down the differences so you can decide which option gives you the best value.
What is a Novated Lease (In Plain English)?
A novated lease is a tax-friendly way to finance a car using pre-tax and post-tax salary, with all your running costs bundled into one predictable payment. Instead of paying for servicing, rego, fuel, tyres and insurance separately, everything is managed for you – which makes budgeting easier and often cheaper.
Buying a Car Outright: When It Makes Sense
Buying outright gives you one advantage: no ongoing finance repayments. However, it also means:
- You carry 100% of the depreciation
- You pay all car running costs from after-tax income
- Major bills (tyres, servicing, insurance) can be unpredictable
- You need significant upfront cash
- For many people, the upfront cost is the biggest barrier.
How the Tax Savings Work
This is where novated leasing becomes powerful. A portion of your car payment and running costs comes out of pre-tax salary, which lowers your taxable income. That means:
- You pay less tax
- Your car becomes more affordable
- Fuel, servicing, tyres, insurance and rego effectively cost less
So…Is a Novated Lease Worth It?
A novated lease can be cheaper if you:
- Earn a moderate-high income
- Want predictable car expenses
- Prefer to upgrade every few years
- Don’t want to manage running costs separately
- Want potential tax savings
Buying outright makes sense when:
- You have significant cash available upfront
- You intend to own the car for 8-10+ years
- You prefer no ongoing payments
For most Aussies comparing novated lease vs buying outright, a novated lease wins on cash flow, tax savings and overall convenience.
Ready to Compare Your Costs?
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