Do They Do a Credit Check for a Novated Lease?

Yes, applying for a novated lease typically involves a credit check. Much like other finance products, leasing providers need to assess your creditworthiness to determine eligibility and set the terms of your lease, including interest rates and fees. But what does this process involve? And how does your credit history affect your chances?

Why Is a Credit Check Required?

Credit checks help finance providers evaluate the risk involved in lending. By reviewing your credit history, payment patterns, defaults, or past financial behaviour, lenders can estimate how likely you are to make regular lease payments. This evaluation:

• Determines if your application will be approved

• Influences the interest rate and terms offered

• Helps prevent financial loss to the lender

What Credit Requirements Are Typical for Novated Leases?

While exact credit score requirements vary by lender, here are common expectations:

• A reasonable credit score indicating timely repayments on prior credit accounts

• No recent defaults or bankruptcies

• Stable credit history over the past 2–3 years

• Evidence of ability to service the lease payments alongside existing debts

It’s important to note that novated leases are secured against the vehicle, which reduces lender risk compared to unsecured loans.

What If You Have Bad Credit?

A low credit score or blemished history doesn’t automatically mean you’re rejected. Lenders often consider a holistic view including:

• Employment stability: Long-term, permanent employment increases your chances.

• Income: Sufficient and steady income that can comfortably cover payments.

• Other financial obligations: A manageable debt-to-income ratio is preferred.

However, some impacts of bad credit may include:

• Higher interest rates: To offset risk, lenders may charge more interest.

• Additional documentation: You might be asked for more proof of income or employment.

• Limited lease options: Some lenders may restrict offers based on credit risk.

Tips for Applicants with Low Credit Scores

If your credit history isn’t perfect, here are some tips to improve your chances:

1. Gather Documentation

Prepare payslips, employment contracts, and proof of other income. This reassures lenders you can meet payments.

2. Reduce Existing Debt

Lower your debt obligations before applying to improve your debt-to-income ratio.

3. Consider a Higher Deposit or Balloon Payment

Some lenders accept a larger upfront payment to reduce their risk.

4. Shop Around

Different lenders have varying risk appetites. Seek providers experienced in working with low-credit applicants.

5. Improve Credit Score Over Time

Regular, on-time payments on existing accounts gradually improve credit standing.

What Else Do Lenders Check?

Besides your credit score, lenders typically review:

• Employment status: Permanent or contract work is preferred.

• Income amount and consistency: Stable pay helps reassure lenders.

• Financial commitments: Mortgages, personal loans, or credit card debts factor into affordability.

• Length of employment: Longer tenure suggests financial stability.

Conclusion

A credit check is a standard part of applying for a novated lease, but a less-than-perfect credit score doesn’t automatically mean denial. Lenders weigh multiple factors, including your income and employment stability, and may still approve your lease, sometimes with adjusted terms.

If you’re unsure about your credit standing or want to understand how it impacts your lease options, contact us today. Our experts can help guide you through the process and find novated lease solutions tailored to your situation.

FAQs

• Do novated lease providers always do a credit check?

  Yes, credit checks are a standard requirement to assess your financial suitability.

• What credit score do I need for a novated lease?

  While requirements vary, a reasonable credit history without recent defaults is preferred. Some lenders offer options for lower scores with additional conditions.

• Can I get a novated lease with bad credit?

  It’s possible if you have stable employment and income, though you may face higher interest rates or additional documentation requests.

• What factors besides credit score do lenders consider?

  Employment status, income, existing debts, and length of employment are key considerations.

• How can I improve my chances of approval with bad credit?

  Provide proof of income, reduce debts, shop around lenders, and consider higher deposits to lower lender risk.