Knowledge base
Novated Lease vs Chattel Mortgage: Which Is Better for Your EV?
If you are buying an EV through a business or via salary sacrifice, two finance structures come up more than any other: novated lease and chattel mortgage. They work very differently, and the right choice depends on your employment situation, tax position, and how you plan to use the vehicle.
Here is a clear comparison.
What Is A Novated Lease?
A novated lease is a three-way agreement between you, your employer, and a leasing company. Your employer deducts the lease payments and running costs from your pre-tax salary, which reduces your taxable income.
At the end of the lease, you can pay the residual to take ownership, start a new lease on a different vehicle, or hand the vehicle back.
Novated leases are arranged through your employer's salary packaging provider, not directly through a broker. Not all employers offer salary packaging. For a detailed explanation, see our guide on salary sacrificing an EV.
Not sure whether salary sacrifice is the best fit? Compare it properly before you commit.
We help you weigh novated lease against consumer and business finance so you see the practical differences, not just the brochure.
Guidance first. No pressure to apply.
What Is A Chattel Mortgage?
A chattel mortgage is a business loan where you take ownership of the EV from day one. The vehicle acts as security for the loan, and you make regular repayments over an agreed term.
Chattel mortgage is available to anyone with an ABN. It is arranged through a finance broker who compares options across a panel of lenders. For the full breakdown, see our guide on chattel mortgage for EV buyers.
Key Differences
Ownership: With chattel mortgage, you own the vehicle from day one. With a novated lease, the leasing company owns it until the residual is paid.
Who arranges it: Chattel mortgage is arranged through a broker. Novated lease is arranged through your employer and their salary packaging provider.
Tax treatment: Chattel mortgage allows potential deductions for GST, depreciation, and interest (for GST-registered businesses). Novated lease payments come from pre-tax salary, reducing your taxable income. With the FBT exemption on eligible EVs, there is no FBT to worry about on the novated lease.
The FBT exemption makes novated attractive — but your employer and payroll setup still have to work.
A broker can talk you through what usually happens next and what questions to ask your payroll team.
Eligibility: Chattel mortgage requires an ABN. Novated lease requires an employer who offers salary packaging.
Running costs: Under a novated lease, running costs (registration, insurance, servicing, charging) can be bundled into the salary sacrifice arrangement. Under chattel mortgage, these are separate expenses (though many are tax-deductible as business costs).
Which Is Better?
It depends on your situation.
Choose novated lease if you are an employee (not self-employed), your employer offers salary packaging, you want running costs bundled into one payment, and you want the simplicity of a salary deduction each pay cycle.
Want indicative numbers before you approach HR?
Share the vehicle band and your situation and we can help you understand what packaging providers often model — so you walk into the conversation prepared.
Choose chattel mortgage if you are self-employed, a sole trader, or run your own company, your employer does not offer salary packaging, you want ownership of the vehicle from day one, or you want to claim GST on the purchase price upfront.
If you are both an employee and a business owner (for example, you have a side business with an ABN), the decision gets more nuanced. Talk to both your accountant and a broker.
Can You Use Both?
Not on the same vehicle, no. But if you have multiple vehicles (for example, one for business and one for personal use), you could use different structures for each.
The Fbt Factor
The FBT exemption on eligible EVs has made novated leases particularly attractive because the usual FBT cost is removed. This tips the balance toward novated lease for employees who have access to salary packaging.
However, if your employer does not offer salary packaging, the FBT exemption on novated leases is irrelevant to you, and chattel mortgage becomes the primary option. For more on FBT, see our guide on the EV FBT exemption.
For a broader overview of finance, visit Aussie Finance Hub.
Not Sure Which Suits You?
A broker can walk you through chattel mortgage and other finance structures. For novated lease, speak to your employer's salary packaging provider. Between the two, you will find the right fit.
Or call 1800 4 NUDGE (1800 468 343).