How we turn any novated lease quote into a single, comparable number, and why the result cannot be bought, influenced or hand-adjusted, for any provider.
Every provider on Novated Compare is measured with the same calculation, run on real customer quotes. No provider pays to be listed, ranked or rated. No provider can pay to change its number or its position. There is no manual, editorial or discretionary step that can move one provider above another. The ranking is a direct mathematical output of the quotes themselves. This applies to every provider without exception, including any that are related to us (see Ownership and related parties).
Novated lease quotes are almost impossible to compare as presented. Some advertise a “flat” or nominal rate, some quote a “comparison” rate, and many state no interest rate at all. The same underlying deal can be dressed up to look cheaper or dearer depending only on how it is written.
To remove that noise, we reduce every quote to one figure: the effective interest rate on a reducing-balance basis. This is the true annual cost of the finance, calculated from the actual money that changes hands, in exactly the same way for every provider. It is the same concept a lender must disclose as a comparison rate on a consumer loan.
From each quote we read four finance figures and nothing else:
We then solve for the single periodic interest rate i at which the present value of every payment, plus the present value of the residual, equals the amount financed:
There is no closed-form solution for i, so we solve it numerically (the same root-finding routine for every quote) and then annualise it to an effective annual rate based on the payment frequency. Because the calculation is purely mechanical, the same inputs always produce the same output, and anyone can reproduce it from the four figures on the quote.
Take a real-shaped five-year lease:
The same deal might be advertised as a headline “flat” rate in the low-to-mid 5% range. A flat rate charges interest on the whole amount for the whole term, even though you are steadily paying the balance down, so the real reducing-balance cost is materially higher. Here it is about 8.5%. We show that 8.5% for this provider, and 8.5% for every other provider whose quote produces the same maths, so the comparison is genuinely like-for-like.
Because the calculation starts from the cash flows rather than the provider’s label, it handles every convention the same way. Where our figure differs from a provider’s own stated rate, we identify the reason and explain it in the result rather than silently overriding it.
| How the quote presents its rate | How we handle it |
|---|---|
| Flat / nominal rate | We recalculate the effective reducing-balance rate from the cash flows; it comes out higher than the flat figure, and we say so. |
| Comparison / effective rate stated | We calculate the rate ourselves and confirm whether our figure matches theirs; close matches are noted as validated. |
| No rate disclosed | We derive the rate entirely from the amount financed, payments, term and residual. |
| Different payment frequency | We read the frequency from the quote and normalise it. Monthly versus fortnightly changes the result, so this is checked carefully. |
A few providers collect finance payments as though you pay across the full lease term, even though the financier is only amortising the loan over a slightly shorter period. The difference is held back as a refundable budget reserve that buffers your running costs, not as an extra finance charge. For example, on a 60-month lease a provider may collect 60 monthly payments while the financier calculates on 58, keeping two months’ worth as the reserve. Smart Leasing typically holds about two months; MillarX typically holds about one. Any reserve left over at the end of the lease is refunded to you.
Because those reserve months are not a finance charge, for Smart Leasing and MillarX we build the effective rate on the number of payments that actually go to the financier, not the full term. We confirmed this against Smart’s own disclosed effective rate: on a 24-month quote that discloses 10.87%, using the reduced repayment count reproduces it almost exactly, while using the full term overstates it by more than three percentage points. LeasePLUS works differently: its own disclosed rate is reproduced by the full term, so that is what we use for it. In every case we treat the reserve as what it is, a separate refundable cash amount, and match how the provider itself expresses the rate. We disclose the mechanism here so you understand why the payments you hand over can run a month or two longer than the underlying loan.
The effective rate measures the cost of finance only. We deliberately keep other things out of it so the number is not muddied:
Every figure originates from an actual provider quote uploaded by a customer, not from marketing material or self-reported rates. Documents are read using AI extraction, and the extracted finance figures are checked before a provider’s number is published or updated. We validate our calculation against providers’ own disclosed rates wherever they state one, which is how we can tell, and explain, when a provider’s headline figure differs from the real effective cost.
Transparency is the product, so the method is built to make favouritism impossible rather than merely discouraged:
Novated Compare is owned and operated by The Trustee for Frederiksberg Family Trust. It is not owned by any of the providers it lists.
In the interest of full transparency, we disclose that some providers listed on this site, including CarBon and Novated Self Serve, are related parties of the owner. This makes no difference to how they are treated. They are read, calculated, rated and ranked by the identical method set out on this page, with no exception, no manual adjustment and no preferential placement, and they appear wherever their real quote data places them. Novated Compare receives no payment, commission or benefit based on which provider a visitor chooses.
Methodology version 1.0. We publish this method so it can be checked. If we change how a rate is calculated, we will update this page.