Does a Novated Lease Affect Your Credit Score in Australia? (2026)

Quick Answer: Yes — a novated lease in Australia involves a credit check and creates a hard enquiry on your credit file. The enquiry stays for 5 years under the Privacy Act 1988. The ongoing novated lease itself may also appear as a liability that reduces your borrowing capacity for other loans, including home loans. If your application is declined due to bad credit, Australian Credit Solutions (ASIC ACL 532003) may be able to remove defaults or enquiries from your file — 98% success rate on accepted cases, No Win No Fee.

You're at work, your employer offers salary packaging, and a novated lease looks like a smart way to get a car with pre-tax dollars. Then someone tells you it involves a credit check — and suddenly you're wondering what that means for your credit file.

Or you've already tried and been declined. Either way, here's exactly what happens.

How Does a Novated Lease Work in Australia?

A novated lease is a three-way arrangement between you, your employer, and a finance company. The finance company provides the lease. Your employer takes on the repayment obligations from your pre-tax salary. You get a car with the tax efficiency of salary packaging.

Because a finance company is extending credit to purchase the vehicle, they assess your credit risk — just like any other car finance application.

Does a Novated Lease Credit Check Affect Your Credit Score?

Yes. Here's what happens:

1. You apply — the novated lease provider submits a credit application on your behalf
2. A hard enquiry is recorded — this appears on your Equifax, Experian, or Illion file immediately
3. The enquiry stays for 5 years — whether approved or declined
4. Impact on score — a single enquiry reduces your Equifax score by a small amount (typically 5–15 points); multiple enquiries within 12 months amplify the effect significantly

The credit check is performed by the finance company providing the lease (e.g., Maxxia, SG Fleet, Fleet Network, Fleetcare, RemServ) — not by your employer. Your employer only deals with the salary deduction component.

Does a Novated Lease Affect Your Home Loan Borrowing Capacity?

This is the question most people miss. Yes — a novated lease can reduce your home loan borrowing capacity in two ways:

1. As a committed expense: The lease repayment reduces your assessed disposable income. Even though it's pre-tax salary, banks include it as a committed liability in their serviceability calculations. On a $700/month novated lease, some lenders reduce your borrowing capacity by $80,000–$120,000.

2. As a liability on your credit file: Some lenders count the total remaining lease obligation as a liability that reduces your assessable equity.

If you're planning a home loan application within the next 12–24 months, talk to your mortgage broker about timing before taking out a novated lease.

Can You Get a Novated Lease With Bad Credit?

This depends on what "bad credit" means on your specific file.

If you've been declined for a novated lease specifically due to credit issues, fixing the underlying credit file problem is the most effective path forward.

What to Do If Your Novated Lease Was Declined Due to Bad Credit

Step 1: Get your credit reports Pull free reports from equifax.com.au, experian.com.au, and creditreport.com.au. Identify exactly what's causing the decline.

Step 2: Assess whether negative entries are removable Not all bad credit is permanent. Under the Privacy Act 1988, negative entries that were listed in breach of credit reporting law can be removed before the 5-year period expires. Common grounds:

• Section 21D pre-listing notice not properly served
• Incorrect amount listed
• Listing during an unresolved dispute
• Duplicate or fraudulent entries

Step 3: Get a professional assessment Australian Credit Solutions offers a free credit file assessment. Our legal team reviews your file and tells you honestly what's removable and what's not — before you pay anything.

Real Case Study: Anthony, Perth — Novated Lease Approved After Default Removed

Anthony, 38, a mine site supervisor from Subiaco, had been using a novated lease for years. When he tried to upgrade his vehicle, the application was declined. A $590 Origin Energy default from 2022 had pushed his Equifax score from 691 to 511.

Australian Credit Solutions reviewed the Origin listing. Origin had issued the Section 21D notice to Anthony's previous employer address — not his residential address, which was on file with Origin. Using an address that wasn't the debtor's residential address is a breach of the Credit Reporting Code.

The default was removed in 39 days. Anthony's score moved from 511 to 701.

His novated lease application was resubmitted and approved. He drives the car he wanted. He pays pre-tax.

Anthony paid nothing until we succeeded.

Get a free assessment from Australian Credit Solutions →

Frequently Asked Questions

Does a novated lease affect your credit score in Australia? Yes. Applying for a novated lease creates a hard enquiry on your credit file that stays for 5 years under the Privacy Act 1988. The enquiry itself modestly reduces your score. An approved novated lease also appears as a liability on your file and can reduce borrowing capacity for other loans.

Do novated lease providers do credit checks? Yes — the finance company providing the lease (not your employer) conducts a full credit check. This includes reviewing your credit score, defaults, court judgements, and enquiry history across Equifax, Experian, and/or Illion.

Does a novated lease affect your home loan borrowing capacity? Yes — in two ways. The lease repayment is counted as a committed expense that reduces assessed disposable income. Some lenders also count the total remaining lease obligation as a liability. Discuss timing with your mortgage broker before applying for a novated lease if a home loan is on your near-term horizon.

Can you get a novated lease with bad credit? It depends on the severity of the credit issue. Minor issues or low scores may still be approved by some providers. Multiple defaults or court judgements will typically result in a decline. Fixing the underlying credit file issue — if the negative entries were unlawfully listed — is the most effective path to approval.

Can I salary sacrifice a car with bad credit? Salary sacrifice and novated leasing are essentially the same arrangement. Whether you qualify depends on the finance company's credit assessment. Bad credit can prevent approval just as it would for any car loan.

How long does a novated lease credit check stay on my file? The hard enquiry created by a novated lease application stays on your credit file for 5 years under the Privacy Act 1988, regardless of whether the application was approved or declined.

What credit score do I need for a novated lease? Most mainstream novated lease providers want an Equifax score above 600. Some providers will work with scores in the 550–600 range depending on the specific circumstances. Scores below 500, or files containing defaults or judgements, typically result in automatic declines.

Fix Your Credit File. Get the Lease.

If bad credit is blocking your novated lease, Australian Credit Solutions can review your file and identify whether the negative entries are removable under Australian credit reporting law.

Why Australians Trust Australian Credit Solutions

Australian Credit Solutions is lawyer-led, ASIC-licensed (ACL 532003), and has operated since 2014. We've helped over 5,000 Australians remove negative credit file entries and access the finance they deserve. Our 98% success rate on accepted cases reflects a simple approach: we only accept cases where we've identified genuine legal grounds. Every case is managed under the supervision of Principal Solicitor Elisa Rothschild BA/LLB (Monash University) — a lawyer, not a call centre. We operate on No Win No Fee: you pay the success component only when we remove an entry from your file. We've won the Industry Excellence Award three consecutive years — 2022, 2023 and 2024. Our 4.9/5 rating from 976+ verified reviews reflects what real clients experience.

All disputes are conducted under the Privacy Act 1988 and the Credit Reporting Code — the laws that govern your rights and creditors' obligations.

Get My Free Assessment → 📞 0489 265 737 🛡️ ASIC Licensed ACL 532003 | ⭐ 4.9/5 from 976+ Reviews | 🏆 Award Winner 2022–2024

Australian Credit Solutions Pty Ltd holds Australian Credit Licence ACL 532003. Credit repair services are subject to individual assessment. Results may vary. This article provides general information only and does not constitute legal or financial advice.

Related reading: Default removal services → | Credit repair Australia → | Credit enquiry removal →