A novated lease depends on an employer participating in the arrangement. When employment ends, the payroll and novation layer can change even though the underlying vehicle finance obligation does not simply disappear.
The exact outcome depends on the lease and novation documents, so the first step is to contact the salary packaging administrator and financier before the employment change takes effect.
De-novation
“De-novation” is commonly used to describe the employer stepping out of the arrangement, leaving the employee responsible under the underlying finance/lease terms until another eligible employer novates the lease or another contractual outcome occurs.
Questions to ask before changing jobs
- What date will employer deductions stop?
- Who must receive the finance rental after that date?
- Can the new employer accept the existing lease?
- Does the new employer use the same or a different salary packager?
- What documentation is required to re-novate?
- What happens to running-cost accounts and unused budgets?
- What is the early termination payout if you do not continue?
Early termination is not the residual
An early termination figure is not necessarily just “remaining rentals + residual”. Finance contracts can use specific payout calculations, fees and timing conventions. Request a formal payout rather than estimating it from the original quote.
If you are comparing a replacement structure
Use the Novated Lease Interest Rate Calculator to understand the finance cash flows in the original quote, but do not use it as a substitute for a formal early-termination payout.
If the new employer permits BYO/self-managed finance, read Can I Keep My Salary Packaging Provider and Arrange My Own Finance?.
About the author: KK Neelamraju is a finance and credit professional and an Authorised Credit Representative through GPS Finance Group.
GPS Finance Group (CRN 000575797) is an Authorised Credit Representative of AFAS Group Pty Ltd (ACL 414426). AFCA Member ID 119860. General information only. Credit approval and pricing are subject to lender assessment. Tax-sensitive information should be checked against current ATO guidance and, where appropriate, with a qualified tax adviser.
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