Will there be a novated lease credit check?

Yes, lenders will perform a credit check when assessing your novated lease application. However, a low credit score does not necessarily prevent approval, as lenders consider the reasons for the score and your current financial situation.

How does bad credit impact a novated lease?

Bad credit mainly affects the interest rate you are charged. You may pay a higher rate than someone with good credit, but you could still access the same lease deals if other aspects of your application are strong.

How to apply for a novated lease with bad credit?

First, check if your employer offers salary sacrificing. Then review your credit score and get a lease quote. If you proceed, the lease provider will guide you through the finance approval process and documentation.

How to Get a Novated Lease with Bad Credit

Q: Can I get a novated lease with bad credit?

Yes, having bad credit does not automatically disqualify you from getting a novated lease. In fact, novated leases can be more accessible for those with bad credit due to stable employment and pre-tax salary deductions reducing risk for lenders.

Q: How will my bad credit novated lease application be assessed?

Lenders assess income, job stability, existing debts, and asset ownership in addition to your credit score. These factors help determine your ability to meet the lease payments reliably over time.

Q: How can I improve my chances of approval?

To boost approval chances, stay in your job for at least 6–12 months, choose an affordable vehicle, and wait until your credit score improves. These steps show financial stability and responsible borrowing behaviour.

Q: What are the risks with a bad credit novated lease?

The risks include high interest rates reducing tax benefits, and potential financial strain if you lose your job, especially since not all employers offer novated leasing. You must also consider the final residual payment.

Q: Are there no credit check novated leases?

No, lenders conduct credit checks to assess your repayment history and financial risk. A credit check is standard for most finance applications, including novated leases, to ensure you can afford the lease.

Can I get a novated lease with bad credit?

Yes, you can still be approved for a novated lease if you have bad credit. In fact, because of how novated leases work, you may have a better chance of approval compared to getting a car loan with bad credit.

Here’s why:

Only people who are in employment are eligible for a novated lease (keep in mind you usually must also have passed probation).

The lease payments can be deducted directly from your pre-tax salary, meaning they’re automatically taken care of by your employer.

Ownership of the vehicle does not transfer to the borrower until the end of the lease (unlike a car loan) which reduces risk for the lender.

The finance is facilitated by a novated lease company with experience in getting different kinds of borrowers approved.

Tax savings can generally make a novated lease a more affordable finance option (particularly if you lease an eligible EV that’s exempt from FBT).

Does a novated lease require a credit check?

Yes, the lender providing the finance for the novated lease will carry out a credit check when assessing your application. Even if the credit check shows a low score, it does not necessarily mean you will have issues being approved for a novated lease. Lenders also look at what is causing the low credit score and how it has changed over time.

How a bad credit novated lease works

Pay for you car and running costs through your salary

Even with a poor credit history, a novated lease can be more accessible than a traditional car loan because repayments are taken directly from your pre-tax salary. This reduces your taxable income and can deliver significant savings over the life of the lease.

Upfront GST savings on the vehicle price

Your employer can claim the GST credit on the car purchase, meaning you don’t pay GST upfront. The maximum saving is currently $6,334, lowering the effective cost of the car before your lease even starts.

Can be used for a new or used car

You don’t have to buy new: novated leases can also be used for used cars, which may give applicants with limited credit options more choice. While lenders do factor in your credit score, they also look at your salary packaging arrangement and whether your income can comfortably cover the repayments. This may mean paying a higher interest rate or additional fees to offset the lender’s perceived risk.

Extra savings for eligible electric vehicles

Eligible EVs are exempt from fringe benefits tax (FBT), making them more affordable to salary package. This exemption is set to be reviewed by the government in mid-2027, but it currently adds extra value for those looking to lease an EV.

The main impact of having bad credit will be on the interest rate you’re charged on the novated lease. In that sense, a novated lease is very similar to a car loan.

If you have bad credit, you can expect to pay a higher interest rate on your novated lease.

But otherwise, you will likely be able to access the same novated lease deals as someone with good credit.

If you have more serious issues on your credit history, like unpaid defaults or if you’re subject to a court enforced debt agreement, it’s unlikely you’ll be eligible for a novated lease.

Confirm your employer offers salary packaging
Not all employers provide car salary sacrificing as a benefit. Start by checking with your HR or payroll team to see if this option is available to you.
Understand your credit situation
If you have bad credit, it’s important to know what exactly is causing issues. Check your credit score and review your report to identify any issues that could affect your application.
Request a novated lease quote
Get an estimate of your repayments based on your salary, the car you want, and your expected annual kilometres. This will help you understand whether you can afford it before proceeding.
Apply through a novated lease provider
If you decide to move forward, a novated lease provider will guide you through the process. They handle the finance application and approval, often working with applicants with less-than-perfect credit.

How will my bad credit novated lease application be assessed?

A credit check is just one part of how your application for a novated lease will be assessed. These are the other factors the lender is likely to consider:

Your income bracket

The industry you’re in and how long you’ve been employed in your current role

Any other debts you have (e.g. credit cards or personal loans)

What other assets you own (e.g. property or shares)

Car finance options & guides

The type of car finance that best suits you will depend on your specific circumstances. Here are some helpful guides to get started.

Novated lease

Car loans

Other vehicles

Compare options

More FAQs

How can I improve my chances of approval?

Here are some steps you can take to give yourself the best chance possible of being approved for a novated lease:

Wait until you are well established in your employment before applying (at least 6 months but ideally 12 months) as this can affect your credit score positively

Choose a vehicle you can comfortably afford (e.g. a novated lease for a used car) even if you end up needing to pay for it using your after-tax salary

Consider waiting until your credit score has improved before applying if you need to.

But remember, there are no guarantees when applying for finance, particularly if you have issues in your credit history.

What are the risks with a bad credit novated lease?

We’ve covered how a novated lease can be a less risky form of finance for lenders. But that doesn’t mean it’s without risk for the borrower. Particularly if you have bad credit.

For example, if you are charged a very high interest rate, some of the tax savings you’ll make by bundling your car running costs into the lease will be undone (although you'll likely still be saving money compared to other options for paying for a car).

You should also think about what would happen if you lose your job.After all, you’ll still be responsible for the novated lease payments, without the tax savings you enjoyed through your employer.

Would you still be able to cover the repayments – for example, using your savings – until you find a new job? Even then, remember your new employer may not offer novated leasing as a benefit.

And don’t forget the residual payment which is the lump sum amount you’ll need to pay at the end of the novated term lease.

Are there no credit check novated leases?

In a word, no. Like any other finance agreement, the provider will do checks to make sure the borrower is able to afford the repayments. A credit check is almost always part of that as it gives a strong indication of how well the person has been able to repay credit in the past.

The novated lease company you apply through should be able to advise you on your likelihood of approval, making a declined application unlikely.

What’s the minimum income for a novated lease?

There’s no set minimum salary required to get a novated lease. Approval works much like traditional finance and depends on your ability to comfortably meet the lease repayments from your income, rather than hitting a specific income threshold.

That said, borrowers with higher incomes generally benefit more from a novated lease, as they can make the most of the associated tax advantages.

Does leasing a car hurt your credit?

Leasing a car will initially appear on your credit file, but it doesn’t have to hurt your credit. Making your lease repayments helps demonstrate responsible borrowing and may even improve your credit score over time.

What’s the lowest credit score to lease a car?

While credit scores below 500 with Experian or below 670 with Equifax are generally considered fair to poor, you may still be eligible for a novated lease. Approval depends less on the exact number and more on how the lease provider and its financier assess your application, including whether your income can service the repayments.

It’s a good idea to speak with a tax specialist or financial advisor to understand your options, and most novated lease companies have specialists who can give you a general idea of whether your application is likely to be approved.

How to get a novated lease with bad credit