What happens to your novated lease if you leave

This is the question that stops most people, and the answer is more reassuring than the silence around it suggests. The car and the finance are yours. What ends is the payroll arrangement, not the lease.

The lease is yours, not your employer’s

The finance lease is between you and the financier. Your employer never owned the car and never held the loan — they took on the payment obligation through the deed of novation, for as long as you worked there.

When you leave, that novation ends. The obligations revert to you, and the lease continues on the same terms it always had.

Your three options

Re-novate with your new employer, if they offer salary packaging. The lease carries over and the tax treatment continues.
Continue the payments directly from your own account. The lease runs on unchanged; you simply lose the pre-tax benefit while it is not novated.
Pay it out or sell the car, subject to the terms of your finance contract.

The gap between jobs

If there is a period between roles, the payments become yours to make directly. Worth knowing before you need to know it, and worth factoring into any decision about the size of the lease.

What changes about the running costs

The budgeted running costs sit with your salary packaging provider, not with the lease. When the novation ends, so does that arrangement: the fuel or charging card stops, and any balance held in your packaging account is reconciled and paid out to you, usually with tax applied.

Exactly how that reconciliation runs is a question for your provider, and it is worth asking them at the point you resign rather than afterwards.

Does self-managing the finance change any of this?

No, and in one respect it makes the position clearer. Because you chose and hold the finance directly, you already have the relationship with the financier and know the terms. Re-novating with a new employer means presenting the same finance to a new salary packaging provider — the same documents any novated lease requires.

The lease travelling with you is a property of novation itself. It is not something you gain or lose by arranging the finance yourself.

What to do at the point you resign

Tell your salary packaging provider your finish date, so deductions and the running-cost account can be reconciled properly.
Ask in writing how the packaging balance will be handled and when.
Arrange direct payment with your financier for any gap before you re-novate.
If your new employer offers packaging, ask early whether they can administer an existing lease — most can, but it takes longer than people leave for it.

Common questions

What happens to my novated lease if I change jobs?

The lease continues — it is between you and the financier, and it was never your employer’s. What ends is the novation, the arrangement that transferred the payment obligation to your employer while you worked there. You can re-novate with a new employer who offers salary packaging, continue the payments directly from your own account, or pay out the lease subject to your finance contract.

Do I have to pay out my novated lease if I am made redundant?

Not usually. The novation ends and the payment obligation reverts to you, but the lease itself continues on the same terms. You can keep paying it directly, re-novate it with a new employer later, or pay it out if your finance contract allows. Speak to your salary packaging provider about reconciling the running-cost balance, and to your financier about payment arrangements for the gap.

What happens to the money in my salary packaging account when I leave?

The running-cost budget sits with your salary packaging provider rather than with the lease. When the novation ends, the account is reconciled and any balance is normally paid out to you with tax applied. The fuel or charging card stops at the same time. Ask your provider in writing how and when they will handle it at the point you resign, rather than afterwards.

Is it harder to change jobs if I arranged my own finance?

No. The lease travelling with you is a property of novation itself and works identically either way. If anything the position is clearer, because you already hold the relationship with the financier and know the terms. Re-novating with a new employer means presenting the same finance documents any novated lease requires.

Get a quote on the same car

Send the car you have been quoted on and we will price the finance separately, so you can see what the bundled quote was charging for it.