What is the Best Length of a Novated Lease?
The best length of a novated lease depends on your personal circumstances, budget, and vehicle preferences. Whether you choose a short-term or long-term lease, there are pros and cons to each option. To get a deeper understanding of novated lease options, check out our Novated Lease Guide.
Short-Term Novated Leases (12-24 months)
Advantages:
Flexibility: If you enjoy upgrading to new car models with the latest features and technology, a short-term lease is ideal. It allows you to change vehicles frequently, which keeps you driving the newest models on the market. Learn more about vehicle options in our blog Top Car Brands for Your Novated Lease.
Less Commitment: A shorter lease requires a reduced long-term financial commitment, giving you the freedom to reconsider your options sooner rather than later.
Disadvantages:
Higher Monthly Payments: Since the lease cost is spread over a shorter period, the monthly payments will be higher compared to a longer lease.
Frequent Paperwork: Renewing leases more often means more administrative work, which can be a hassle.
Depreciation Impact: Short-term leases tend to feel the effects of initial vehicle depreciation more acutely, meaning the higher cost of ownership may become noticeable early on. For tips on managing depreciation with a novated lease, see our post on Managing Car Depreciation with a Novated Lease.
Long-Term Novated Leases (36-60 months)
Advantages:
Lower Monthly Payments: The lease cost is spread over a longer period, which results in more manageable monthly payments. If you’re looking for cost-effective options, check out our blog on How Novated Lease Monthly Payments Work.
Financial Stability: Long-term leases offer more predictable financial planning, as you know what to expect in terms of lease payments for a longer duration.
Depreciation Management: Depreciation costs are better spread out over time, reducing their financial impact.
Disadvantages:
Less Flexibility: A long-term lease means you’ll have to stick with the same vehicle for a longer period, which could be frustrating if you like upgrading to newer models frequently. Check out our blog on Novated Lease Transfer Options for more on how flexibility can be maintained.
Outdated Technology: As cars continue to advance, a vehicle leased for 4-5 years may begin to feel outdated, especially regarding safety and tech features. Learn more about the latest car models with novated leases in our post Tesla Models for Novated Leasing.
Higher Overall Commitment: Committing to a longer lease term means you’re locked in for an extended period, which can be limiting if your financial situation or vehicle preferences change.
Choosing the best-novated lease length depends on what matters most to you. If you value flexibility and don’t mind higher payments, a short-term lease may be your best bet. If affordability and long-term financial predictability are key, then a longer lease will likely suit you better. It's essential to assess your budget, vehicle needs, and lifestyle before deciding. Explore the costs and savings of novated leases in our blog Novated Lease Calculator.
Need help determining the best-novated lease term for you? Get in touch with our experts today to explore your options!