It is the most common worry about novated leasing, and a fair one: the lease comes out of your salary, so what happens if you leave the job? The short version is that you keep the car, and the arrangement travels with you. Here is how.
The lease is yours, not your employer’s
A novated lease is a three-way agreement between you, your employer and the financier, but the car and the finance obligation are yours. Your employer’s role is just to route the payments from your pre-tax salary. When you leave, that routing stops, but the lease itself does not disappear and the car stays with you.
What actually happens when you leave
One of a few things, depending on your next step:
- New employer offers salary packaging: you novate the lease to them and it carries on pre-tax, usually with a bit of paperwork.
- New employer does not offer it: the lease becomes self-managed. You keep paying it directly from your own pocket, so you lose the tax benefit during that period but keep the car.
- Between jobs: same as above, you cover the finance payments directly until a new arrangement is set up.
Redundancy and the running costs
Redundancy works the same way, the car is yours and the finance continues. What stops immediately is the pre-tax running-cost budget, so from that point you pay fuel, insurance and servicing directly rather than through the package. Any unused running-cost balance that was collected is generally reconciled back to you.
Worth knowing before you sign
None of this makes a novated lease a bad idea, but it is why the finance rate matters so much. If you might change jobs mid-lease and spend time self-managing it, you want to be sure the underlying finance is fair, because for that stretch you are paying it like a normal car loan without the tax wrapper. Check the effective rate before you commit.