The Best Convertibles for Novated Leasing: Top Picks for Style and Savings

29 Nov

Convertibles offer a unique driving experience that's hard to beat for those who appreciate the blend of style, sophistication, and the thrill of open-air driving.

Opting for a novated lease to finance a convertible makes it possible for Australian salaried employees to enjoy these perks without significant up-front costs. With novated leasing, expenses are bundled into a structured, pre-tax payment plan that covers most running costs, making the process convenient and tax-efficient.

Let’s explore the best convertibles available for novated leasing in Australia. In this guide, we'll cover why a novated lease is an ideal solution for obtaining a stylish car and provide guidance on top models suited to Australian conditions, from high-performance classics to more fuel-efficient choices like plug-in hybrid electric vehicles (PHEVs).

How Novated Leasing Works for Convertibles

Novated leasing is a popular vehicle financing option in Australia that provides a tax-effective way for employees to own a car. A novated lease involves a three-way agreement between an employee, employer, and a leasing company.

Payments are made from the employee's pre-tax salary, reducing taxable income while covering the car and associated running costs like fuel and maintenance. This approach provides salaried employees with a structured way to drive a new or nearly new car without needing a cash purchase or personal finance loan.

Here's a breakdown of how novated leasing works for convertibles:

Structured Payments: With novated leasing, regular, fixed deductions are made from the employee's salary to cover lease payments and vehicle costs, like fuel and maintenance, simplifying budgeting.
Ownership Flexibility: Unlike standard leases, in which the vehicle is returned, novated leasing usually requires a residual or "bubble" payment at the end of the term. This payment enables the employee to own the car outright.
Eligibility for a Range of Vehicles: Convertibles of various types are eligible for novated leasing, provided they're less than 15 years old by the lease's end. This includes traditional gas-powered convertibles, PHEVs, battery electric vehicles (BEVs), and even hydrogen fuel cell electric vehicles (FCEVs), as long as they meet the age requirement.
Value Retention: Convertibles generally retain their value well, thanks to their unique appeal, making them an attractive choice for leasing.

Novated leasing not only makes luxury more accessible, but it also provides practical and financial advantages, making the experience of driving a convertible both enjoyable and economical.

Key Factors When Choosing a Convertible for Novated Leasing

Choosing the right convertible for a novated lease involves evaluating factors like value retention, comfort, and alignment with tax considerations. These aspects help ensure the vehicle remains a worthwhile investment throughout the lease term.

Resale Value: Vehicles that retain their value over time are an intelligent choice for novated leasing. Convertibles from reputable brands often have higher resale values, which can help lower the residual payment needed at the end of the lease.
Comfort and Practicality: Although convertibles are admired for their style, selecting a model that offers enough boot space and comfortable interiors for daily Use is essential.
Luxury Car Tax (LCT) Threshold: Australia's luxury car tax threshold is currently $91,387. This figure is important for high-end convertible buyers, as exceeding it may increase lease costs. Choosing a vehicle below the LCT threshold can help manage costs effectively.
Mileage and Maintenance: Some convertibles have lower maintenance costs and longer-lasting parts. Selecting a durable model with accessible service options can keep running costs predictable and within budget.

Considering these considerations helps ensure your convertible choice aligns with the terms and benefits of novated leasing.

Cost and Tax Considerations

Understanding cost and tax implications can help you get the most out of novated leasing.

Here's what to consider:

Salary Sacrifice: Novated leasing allows payments to be deducted from pre-tax income, potentially lowering taxable income. This is especially advantageous for high-value vehicles, as tax savings can offset premium costs.
Residual Payment Planning: At the end of the lease, a residual or "bubble" payment, set by ATO guidelines, is required to secure vehicle ownership. This final payment amount varies based on the lease term and should be factored into the long-term cost considerations, especially for higher-value convertibles.
Depreciation and Resale Value: Since you'll own the car at the end of the lease term, choosing a convertible with a substantial resale value can minimise depreciation-related losses. Popular and well-built models tend to retain their value, making them a smart financial choice.

Luxury Vehicle Adjustments

For those considering a luxury convertible, there are additional adjustments and tax implications to consider:

Luxury Car Tax (LCT): High-end convertibles that exceed the luxury car tax threshold ($91,387) incur additional tax charges. Leasing a luxury convertible with novated terms can provide some financial relief, as the salary sacrifice arrangement can help offset tax-related costs associated with premium vehicles.
Enhanced Maintenance Needs: Luxury convertibles often come with specific maintenance requirements, which can be accounted for within the lease's bundled payment structure. However, it's important to ensure these maintenance costs align with your budget.
Resale Value of Luxury Features: Luxury convertibles often retain their value better due to high-end features, such as advanced safety systems, superior materials, and high-performance engines. When the residual payment stage arrives, high resale value can reduce the cost burden, making luxury leasing more feasible.

Top Convertible Options for Novated Leasing in Australia

Here's a selection of convertibles well-suited for new leasing. Each model balances performance, style, and comfort, making it attractive for employees looking for something special.

Mazda MX-5

Price Range: Affordable and practical.
Why Choose It: Known for its sleek design and dependable performance, the Mazda MX-5 is an easy choice for city and coastal drives.
Key Features: Lightweight body, precision handling, fuel efficiency, and a comfortable interior.
Suitability for Novated Leasing: Its excellent resale value and low maintenance costs make it a practical choice for leasing as part of a salary sacrifice package.

BMW Z4

Price Range: Mid-to-high range.
Why Choose It: The BMW Z4 blends luxury and performance, featuring a turbocharged engine and refined interior for those prioritising high performance.
Key Features: Adaptive suspension, leather interiors, and BMW's signature design.
Suitability for Novated Leasing: Strong value retention and appealing luxury features make the Z4 a worthwhile lease option.

Mercedes-Benz C-Class Cabriolet

Price Range: High-end.
Why Choose It: The C-Class Cabriolet is a premium choice with an elegant design, comfortable interiors, and a powerful engine.
Key Features: Leather upholstery, advanced infotainment, and refined ride quality.
Suitability for Novated Leasing: With high resale value and a vast network of authorised service centres, this model is ideal for those seeking luxury and ease of maintenance.

Mini Convertible

Price Range: Mid-range.
Why Choose It: The Mini Convertible is compact, quirky, and perfect for city driving.
Key Features: Exceptional handling, customisable interiors, and Apple CarPlay.
Suitability for Novated Leasing: Its affordability and strong brand reputation make it a budget-friendly, stylish option.

Audi A5 Cabriolet

Price Range: High-end.
Why Choose It: The A5 Cabriolet offers refined design and smooth handling, appealing to tech-savvy drivers.
Key Features: Audi Virtual Cockpit, premium interiors, and driver assistance systems.
Suitability for Novated Leasing: High-value retention and strong tech features make it a valuable leasing choice.

Porsche 718 Boxster

Price Range: High-end luxury.
Why Choose It: The Porsche 718 Boxster is built for performance, making it a great choice for convertible enthusiasts.
Key Features: Turbocharged engines, sports suspension, and impeccable design.
Suitability for Novated Leasing: The Boxster's strong resale value and high performance make it an appealing option for those seeking a premium sports car experience.

Benefits of Leasing a Convertible Over Buying

Leasing a convertible through novated leasing comes with a range of financial and practical benefits, making it easier to experience a premium vehicle without the demands of full ownership.

Predictable Expenses: Budgeting becomes straightforward with fixed monthly payments covering both the lease and operating costs.
Pre-Tax Savings: Deductions from pre-tax income offer cost savings, making novated leasing an intelligent choice for employees.
Ownership Flexibility: Unlike traditional leases, in which the car is returned, novated leasing allows for ownership once the residual payment is made, giving you complete control after the lease.

This flexibility makes novated leasing a compelling choice for employees who wish to drive an exclusive vehicle without long-term financial risks.

Practical Considerations for Novated Leasing a Convertible

Before finalising your novated lease, there are a few practical aspects to consider to ensure a smooth experience.

Used vs. New Cars: Both new and used convertibles are eligible for novated leasing if the car is less than 15 years old at the end of the lease term, offering greater flexibility.
Portability: Should you change employers, your lease is portable, allowing you to transfer it without disruption.
Personal Use Only: Novated leasing is meant for personal Use only, not business, so it's not an option for sole traders or ride-sharing drivers.

Lease Management and Portability

Novated leases are financially beneficial and convenient to manage and transfer.

Here's how:

Portability Between Employers: If you change employers during your lease term, the lease can be transferred seamlessly to the new employer, allowing you to continue driving without disruption.
Simplified Lease Administration: A novated lease specialist typically handles administration, from setting up salary deductions to organising vehicle payments, simplifying the process.
Options for Lease Renewal or Buyout: When the lease ends, you can either renew it or buy the vehicle outright with the residual payment, allowing flexibility based on your changing needs.

Final Thoughts

Novated leasing is an excellent option for those looking to make a style statement with a convertible. By providing a structured and tax-effective way to own a car, novated leasing helps Australian employees enjoy the thrill of open-air driving without long-term financial risk. With options ranging from luxurious to economical, a novated lease offers an attainable path to drive a stylish convertible, combining lifestyle aspirations with practical personal finance planning.

Ready to drive the convertible of your dreams? Contact Novated Finance Australia, your novated leasing specialist, to find the ideal lease for your next vehicle and make your driving dreams a reality today.

Frequently Asked Questions

Yes, you can lease a luxury convertible through novated leasing in Australia. However, be aware of the luxury car tax (LCT) threshold, which may impact costs for high-end models. Leasing can make luxury more accessible, especially with tax advantages from salary sacrifice arrangements.
The main restriction is that the convertible must be less than 15 years old at the end of the lease term. This rule applies to new and used vehicles, ensuring the car retains value and meets lender guidelines.
Yes, novated leasing is available for electric vehicles, plug-in hybrid electric vehicles (PHEVs), and even hydrogen fuel cell electric vehicles (FCEVs) as long as they meet the age requirement. Leasing options like these can offer additional benefits, such as FBT exemption discounts or an electric car discount.
Novated leasing differs from a personal loan or mortgage because it allows pre-tax salary deductions, reducing taxable income. Unlike personal finance options, we novated leases bundle payments and maintenance costs, providing convenience and potential tax savings.
Yes, novated leases are portable. If you switch jobs, your lease can be transferred to your new employer, maintaining the same payment structure. This portability makes novated leasing flexible and adaptable to changes in employment.

Mathew Lloyd