So, you’ve got a novated lease — or you’re thinking about one (good idea) — but life’s thrown you a curveball. Maybe you've changed jobs, landed a remote role, or just want out. The good news? Yes, you can request to end a novated lease early.
How Does a Novated Lease Work (And Why It Matters)?
A novated lease is simply another way to finance a car — one that lets you pay for it using a portion of your before-tax salary. It’s set up through your employer, so the repayments come straight out of your pay, helping reduce your taxable income.
You get the car you want, plus the option to bundle running costs like fuel, servicing, insurance, and rego into one regular payment — making it easier to budget.
Because it’s linked to your job, a novated lease can move with your employment. So, if your work situation changes, your lease might need a few adjustments too. But don’t stress — you’ve got options.
Can You End It Early? Yes — But Timing Plays a Part
Like most finance arrangements, ending a novated lease before the agreed term can come at a cost. That’s because your payments are based on completing the full lease term (typically 2–5 years) and the forecasted value of the car at the end (known as the “residual value”).
While you can request to pay your lease out early, it’s not the ideal route — especially if you’re early into the lease term. Paying out the remaining balance and residual upfront can be expensive, and often doesn’t deliver the best financial outcome. The vehicle’s resale value early on in a lease often doesn’t equal the payout amount needed to exit the lease early, meaning if you need to dispose of the vehicle and change it completely, you may have significant out of pocket expense.
If your circumstances change, you can:
- Stop salary packaging and continue paying the financier directly, commonly referred to a non-managed lease, or
- Refinance should you need to lower repayments, however it’s best to only refinance when your lease payout value is less than the vehicle’s market value at the time, more commonly in the late stages of your lease contract.
A novated lease is designed to run its full term. But if things change, you do have options — and Fleetcare is here to help you navigate them.
What Are Your Options?
Here are the most common paths if you’re ending early:
- Payout the Lease
You can request to pay off the remaining lease amounts and take full ownership of the car. This is a good option if you love the car and want to keep it — or if you’re moving to a job that doesn’t offer novated leasing.
- Transfer the Novated Lease or Refinance
If you’ve switched employers and the new one offers novated leasing, you may be able to roll your existing lease into a new agreement without the need to refinance. It’s a fresh start — with the same car.
If your new employer doesn’t offer novated leasing, you can simply pay the lease repayments out of post-tax salary as a non-managed novated lease until your lease contract expires. You could also opt to refinance the novated lease via a personal loan via a different lender subject to their terms and conditions.
- Sell the Car
You can also sell the car to pay out the lease — but make sure you check the payout amount first to ensure you’re not left out of pocket.
What If You’re Made Redundant?
If you lose your job, your novated lease doesn’t just vanish — but it doesn’t become a nightmare either. You can:
- Continue the lease privately and make payments directly
- Refinance or pay out the balance
- Renovate your lease to a new employer should they allow it
Fleetcare can help you understand your options and work through the next steps in the event you're made redundant.
Is a Novated Lease Still Worth It?
For many, yes. Even if you don’t make it to the end of the lease, the tax savings and bundled running costs can make a novated lease a financially smart option. It’s flexible, especially if you work in a profession with changing roles or contracts.
Final Thoughts
Ending a novated lease early isn’t ideal — but it’s not the end of the world either. With the right understanding and a bit of planning, you can transition smoothly and avoid any nasty surprises. And if you’re just starting your novated leasing journey, it helps to know that there’s flexibility built into the deal.
Want help navigating your lease options? Talk to our team or get a novated lease quote today.
📞 134 333 | 🌐 info@fleetcare.com.au