A novated lease quote can look expensive because it contains many lines. But not every line is a provider fee. A clean comparison separates finance charges, administration charges and vehicle running-cost budgets.
Finance establishment fee
A financier may charge a one-off establishment fee for setting up the finance. Check whether it is paid upfront or added to the amount financed, because a financed fee becomes part of the cash-flow calculation.
PPSR fee
A PPSR-related charge can appear with secured vehicle finance. Ask whether the displayed amount is a government/register cost, a financier charge, or a combined amount.
Salary packaging administration
The employer's packaging administrator may charge a regular management or administration fee. This belongs in the total package comparison but should not be mistaken for interest.
Running-cost budgets
Fuel/charging, servicing, tyres, registration and insurance can be budgeted through the salary package. These may represent expected future vehicle costs rather than amounts retained as fees by the provider.
The important questions are:
- how was the budget estimated?
- what happens to under/overspend?
- are there separate transaction or insurance administration charges?
Why financed fees affect the implied rate calculation
If an establishment fee is added to the finance principal but you omit it from the amount financed, a reverse-rate calculation will be distorted.
The GPS Novated Lease Calculator includes establishment, PPSR and other financed-fee fields, plus an amount-financed override for quote auditing.
Build a total-cost comparison
Use How to Compare Two Novated Lease Quotes Properly to put fees and budgets into separate columns.
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.
Need help matching this to a finance option?
GPS Finance can review the funding purpose, conduct, documents and lender fit before you make a formal enquiry.
