First question…
Can retirees get a novated lease? In most cases, no, because a novated lease is a salary packaging benefit, and retirees usually don’t draw a salary. But that’s not the full story.
If you’re nearing retirement, semi-retired, or still earning through part-time work, self-employment, or super drawdowns, you may still have options.
Many Australians in this phase hit the same wall:
“I want a reliable new car without dipping heavily into my savings, but I’m no longer on payroll, so do I even qualify?”
It’s a valid concern. At Vehicle Solutions, we’ve spoken to countless soon-to-be retirees and pensioners facing this exact situation. You’ve worked hard and want peace of mind with your next vehicle but not at the expense of using up your retirement savings.
Here’s the truth about novated leasing for retirees, who qualifies, what to watch out for, and how to make the numbers stack up.
Can Retirees Lease a Car?
Yes, but with conditions. A novated lease is only available if you’re employed and receiving a regular salary from a participating employer. That’s because the lease is structured as a salary packaging agreement; it’s tied to your pre-tax income, allowing you to pay for a vehicle and its running costs (fuel, servicing, registration, insurance, and more) before income tax is deducted.
So, if you’re fully retired and no longer earning a salary, you won’t qualify for a novated lease. However, if you’re:
- Working part-time in retirement,
- Earning income through consulting or contracting under a PAYG arrangement,
- On transition-to-retirement (TTR) income with super and still employed part-time,
…you may still be eligible.
Is Leasing Financially Sensible in Retirement?
If you’re still working or plan to keep working during early retirement, then yes, a novated lease can be a cost-effective way to drive a new car while reducing your taxable income.
You’ll be able to:
- access fleet pricing, which slashes the purchase price,
- gain GST savings on the vehicle and running costs,
- pay with pre-tax salary, which means less income tax,
- pay less than traditional car finance or loans.
This can potentially help you save thousands of dollars, especially if you’re eyeing a fuel-efficient or electric vehicle that falls under the ATO’s Luxury Car Tax threshold and qualifies for 100% tax exemption under current EV salary packaging laws.
What to Consider Before Leasing a Car as a Pensioner
Before entering any lease in retirement, take a good look at:
- Income stability: Is your salary consistent enough to cover repayments?
- Lease term: Can you commit to a 3- or 5-year contract?
- Vehicle usage: Are you still driving enough to justify the package?
- Exit plans: What happens if your income changes suddenly?
Novated leasing is flexible, but it remains a financial commitment, and it’s essential to align it with your retirement planning and long-term cash flow.
Can Pensioners Pass the Credit Check?
Credit checks still apply, even for novated leases. Lenders will assess your:
- Current income
- Living expenses, and
- Credit history.
If you’re fully retired and rely solely on the aged pension, approval is less likely.
What Makes a Good Car for Upcoming Retirees?
As you enter retirement, priorities shift from performance to comfort, safety, and affordability. Many of our older clients at Vehicle Solutions prefer:
- hybrid or electric vehicles to lower running costs,
- compact SUVs for easy entry and visibility,
- new cars with warranty for maintenance peace of mind,
- models with low fuel consumption, smart safety features, and smooth handling.
Our sister company, Motorbuys, helps you find the best latest deals from top dealerships across Australia, while we help with the novated lease part.
What Happens if the Contract Holder Passes Away?
It’s not a pleasant thought, but it’s essential. If the leaseholder passes away mid-term:
- The lease usually becomes part of the estate liabilities.
- The estate may pay out the residual value or the remaining lease amount.
- Some novated leases include death cover or insurance options to offset costs.
Before signing, always ask for the important information regarding contract terms in unexpected scenarios.
Is It Better to Lease or Buy a Car Before Retirement?
If you’re still earning and want to reduce tax, a novated lease makes financial sense. You save on:
- GST,
- Running costs,
- Upfront vehicle cost, and
- Income tax.
You also avoid a large lump-sum payment upfront, preserving cash for other retirement goals.
However, if you’re retired with no salary income, purchasing a car outright, especially a used vehicle, might be more flexible and stress-free.
At Vehicle Solutions, we sit down with retirees and working Australians to compare their car leasing options side by side and offer personalised guidance. Reach out to us or start by exploring the latest cars in stock for novated leasing.
Frequently Asked Questions
What is the maximum age for a novated lease?
There’s no fixed age limit. Many providers approve leases for clients in their 60s, and even 70s, if their income is stable. Your eligibility depends on whether you’re employed and earning a taxable income
What is the oldest car you can acquire on a novated lease?
Most leases are for new cars, but some providers also allow used cars, typically those under 7 years old in good condition with low mileage.
Do you really save money with a novated lease?
Yes, especially when combining tax savings, fleet discounts, and GST exemptions. A novated lease is a smart way to own a car, as it reduces your taxable income, thereby increasing your final take-home pay.
Can I novated-lease a car if I’m semi-retired or work part-time?
Yes, if your employer allows it and you receive regular salary payments. This includes casual or part-time roles under PAYG structures.
Need Help Understanding Your Options?
At Vehicle Solutions Australia, we make novated leasing transparent and simple, especially for Australians planning their retirement. Based in Adelaide and trusted nationwide, we’ve helped thousands of drivers save on vehicle costs. Whether you’re still working or planning your next phase, we’ll help you access the smartest car leasing options. Reach out to Vehicle Solutions for tailored advice or use our free calculator to know how much you will save today.
