Car Leases

Compare effective car leasing solutions and their tax benefits through Savvy.

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, updated on August 29th, 2023       

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Compare car leasing options

Savvy provides car leasing comparison from a range of commercial lenders including all the major banks and reputable non-bank financiers. Our commercial consultants and products can help with securing the best rates and terms on a standard car lease or a fully-maintained one, with our online process enabling fast approvals and settlements.

What is a car lease?

A car lease is a commercial finance product that allows businesses and individuals to use a car without owning it. In a car lease arrangement, the financier buys the vehicle and then leases it to you for a set term, these terms range from 1-5 years and include a residual payment. They're an attractive tax effective solution that can allow you potential to claim your entire monthly lease payment as a tax deduction.

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Why choose Savvy for your car lease

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Standard car lease or fully maintained?

Which car lease you choose will depend on your circumstances. If you need to drive, but you don't want the hassle of arranging maintenance, insurance, and registration, you can do that. A fully-maintained car lease provides a very convenient, low-admin way to get the use of a vehicle. It works just like shorter-term car hire in that maintenance, insurance, and registration is all taken care of within your regular payments. Agreements usually run between two and five years. When the lease term ends, you hand back the car, and your obligations are over. If you're a small business or sole trader, ease of budgeting and the tax benefits of a fully-maintained car lease can be a big plus. Because you don't own the vehicle, it's considered an expense, and you can claim all of the business use against your tax bill. You'll need to be careful to operate the vehicle within any agreed kilometres-travelled limit and to return it in good condition. However, there's no risk at the end of the term with regard to depreciation, resale value, and selling the vehicle.

Fully-maintained car lease Non-maintained car lease
Maintenance included in monthly payment, and arranged by the lessor
Arrange your own servicing on your own schedule, around recommended intervals
Costs are tax-deductible
Costs are tax-deductible
Rego included in monthly payments
Register the vehicle yourself
Insurance included in monthly payments
Source your own insurance
Breakdown assistance included
Opt for breakdown cover or choose to pay as you go

While fully-maintained vehicle leasing is easier to budget for, it’s more expensive and removes some of the freedom from sourcing servicing and insurance. Companies with larger fleets often choose fully-maintained leases because doing so removes the need for a lot of administration work.

Short on paperwork? Savvy’s low-doc car lease options can put you in the driving seat

A Low-doc vehicle lease can be the ideal solution for many individuals and businesses. When you apply for a low-doc car lease, the provider will look at different elements of your finances or business to determine how much finance you qualify for. You can use a low-doc version to lease a car when your business is new and you haven’t got the necessary tax records for a standard lease. Low-doc leases also work well if you’re upscaling and need to invest in vehicles or equipment to grow. In that instance, your recent tax returns or accounts might not reflect your potential. Lenders will take your time trading or employed and your personal or business credit history into account instead. Savvy’s expert brokers can help you find a car lease option tailored to your specific needs, and guide you through the application and qualification requirements.

Car leases and tax: Remember to claim only for the business or work percentage of vehicle use

When you're deciding whether to lease or buy a vehicle for your business or even if you're an employee, it's essential you consider tax implications. Choosing the right car finance option can have a massive effect on how much tax you need to pay and that in turn, can affect your cash flow. When you sit down and budget, however, it's crucial to weigh up how much you use the vehicle for work or business. That percentage is what presents a tax benefit to yourself or your business. Any personal use isn't tax-deductible. Likewise, when it comes to filing returns, you'll need to account for vehicle use correctly.

If your vehicle doesn't fit in that bracket, you'll need to claim travel expenses rather than car expenses. If you're unsure about any of the tax implications connected with buying or leasing a vehicle, speak with your accountant or get in touch with one of our expert car finance brokers.

What if my job means I do a lot of driving every day?

Employees are not allowed to claim tax-deductions on a leased vehicle for travel between their home and work, as this gets classed as private use. However, when your job means driving often, and you use your car to do so, you can claim under certain circumstances.

  • If you regularly work across a variety of different sites or locations during any given day. Real estate agents who constantly travel to property inspections, salespeople who need a reliable vehicle in the field – a car lease lets you regularly update your car, so you’ll never miss an important meeting.
  • You can’t ordinarily claim travel expenses between home and work. However, you can if your base of operations is at home and you clock on and off there.
  • You can still claim expenses on a leased car if your employer pays you an allowance because you have to drive a lot, and you put that extra pay towards the cost of your travel.

Some frequently asked car lease questions?

What type of car can I get with a car lease?

Vehicle leasing is a way of gaining use of any car or vehicle you choose. It’s an option for finance that can be applied to any vehicle out there, no matter what the value or type. Larger luxury cars, trucks, SUVs, sedans, and hatchbacks are all available with a lease. You can choose the specification of the vehicle before you order it, selecting options and features in the same way as you would if you were buying a car with cash.

How long do I have to keep a vehicle for when I sign a lease agreement?

Car leases typically run for periods between one and five years, and sometimes even longer. Different lenders offer various terms, so it’s important to check the provider you’re considering caters for your specific needs.

What are the monthly costs of leasing a car?

One of the many reasons so many Aussies opt to lease a car is that repayment terms are so flexible. You can choose the length of the agreement to match your budget, and adjust payment amounts further by including a lower or higher residual payment. Using a deposit is also a great way of reducing the amount you regularly pay. Tax benefits often outweigh a lot of the cost of leasing a vehicle too.

What does 'residual value' mean?

A residual value or payment is due at the end of a car lease or loan. You can reduce your monthly repayments by using one.

How many kilometres can I drive a leased car?

Different car leases offer various allowances for kilometre usage. For example, with a fully-maintained car lease, part of the cost of your deal is defined by how many kilometres you’ll travel. That’s because it affects the resale value of the vehicle at the end of the agreement.

Will registration costs be included in my car lease payments?

That depends on what type of lease you take out. Fully-maintained car leases include servicing, registration and insurance. Some car leases, however, require you to be responsible for maintenance, rego and keeping the vehicle insured – usually with a fully-comprehensive policy.

What is GAP Insurance, and do I need to get that?

Guaranteed Asset Protection or GAP insurance provides peace of mind if you’re leasing a vehicle or you’re buying a car, van, or a truck using a different form of finance. Gap insurance is a way of protecting you or your business from financial loss if you have an accident, and the vehicle gets written off. When that happens, there’s usually a ‘gap’ between the amount you still owe and the listed price of the car. GAP Insurance covers that amount.

What happens with a residual at the end of my car lease term?

If at the end of the lease you would like to keep the car, you will need to pay out the residual amount. If you don't want to keep the car, you can start a new lease by paying out the residual via a trade in. 

How is GST treated if I am not the owner of the car?

With a car lease, the lender owns the car you drive, this structure allows the lender to claim back the GST within the purchase price of the car.  

This results in your monthly car lease payment being calculated on the purchase price of the car excluding GST which delivers a cheaper monthly repayment compared to other loan options. This is another large benefit of a car lease option. 

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