Full Service Lease — What It Includes, Costs & Comparison

Updated 12 Mar 2026Content was accurate at the time of publication

A full service lease (also called a fully maintained lease or fully maintained operating lease) bundles vehicle finance, maintenance and administration into a single regular payment. This arrangement simplifies vehicle ownership for your business by providing predictable running costs, reducing administrative overhead and delivering a turnkey fleet solution. This guide explains what a full service lease covers, how monthly payments are calculated, tax and accounting implications, cost drivers and a practical checklist to compare providers with confidence.

What is a Full Service Lease?

A full service lease is a commercial vehicle leasing arrangement in which the lessor provides the vehicle and manages most operating costs for the contract term. Under a full service lease you pay a fixed monthly fee that typically covers vehicle finance plus an agreed package of services such as scheduled maintenance, tyres, registration and fleet administration. The aim is cost predictability and reduced in-house fleet administration.

Who uses it?

Small and medium business owners who want predictable running costs and lower administrative burden.
Fleet managers seeking to outsource maintenance, servicing and compliance.
Individuals using a vehicle for business purposes who prefer operating flexibility without buying.

Full service leases are also known as fully maintained operating leases or fully maintained leases. They differ from a finance lease (a capitalised arrangement) or a novated lease (a salary packaging arrangement).

How a Full Service Lease Works

A full service lease follows a straightforward lifecycle:

Quote & contract: You agree term length, kilometre allowance and the included services. Contracts commonly run 24–60 months.
Delivery & set-up: The lessor sources the vehicle and sets up fleet administration (maintenance schedules, telematics if included).
Ongoing monthly payments: You pay a single monthly amount covering finance and the service bundle.
Management by provider: The provider coordinates scheduled maintenance, tyre replacement and registration; roadside assist is often included.
End-of-lease options: At term you can usually return the vehicle, extend the lease, or buy the vehicle for a pre-agreed residual amount.

Key contract features include kilometre limits and excess-kilometre charges, residual or balloon value (which affects your monthly payment), service level agreements (SLA) specifying repair response times and authorised repairers, and early termination penalties.

What's Typically Included in a Full Service Lease

Most full service leases bundle a combination of these items:

Finance/rental charge for the vehicle
Scheduled servicing and preventative maintenance
Tyre replacement (within agreed wear and mileage limits)
Registration and compulsory third party (CTP) insurance premiums
Roadside assistance and towing
Fleet administration and reporting (maintenance logs, cost-per-km reports)
Access to authorised service networks and warranty management
Optional telematics or asset-tracking packages in some contracts

Common variations exist: some providers include comprehensive insurance; others require you to insure and claim costs back. Always check whether insurance, fuel management and accident administration are included.

What's Usually Excluded or Optional

Typical exclusions and optional items:

Fuel and tolls
Traffic fines, parking fines and toll penalties
Damage above fair wear and tear (excess repair costs)
Excess-kilometre charges beyond the agreed allowance
Optional upgrades or aftermarket accessories
Comprehensive insurance if not included (you may be required to maintain specific insurance levels)
Vehicle modifications unless pre-approved

If you need salary packaging, compare with novated lease options which handle employee salary deduction arrangements.

Costs and How Monthly Payments Are Calculated

Monthly full service lease payments are built from several elements:

Depreciation / lease charge: the cost of the vehicle spread over the term, influenced by the residual value.
Interest margin: the lessor's financing cost and margin.
Maintenance pool / service charge: an estimated monthly provision for scheduled and unscheduled servicing, tyres and wear items.
Administration & risk fees: contract admin, reporting, insurance risk premiums and default fees.
GST: applied to most lease payments and maintenance charges.

A simplified illustrative formula for the monthly payment:

Monthly payment = Depreciation charge + Interest charge + Maintenance pool + Admin & risk fees + GST (where applicable)

Worked example (illustrative, AUD)

Vehicle list price: $10,000
Term: 48 months
Residual value (agreed): $16,000 (40% of list)
Depreciable amount: $10,000 − $16,000 = $14,000 → Depreciation per month = $100
Interest & margin (estimated): $120 per month
Maintenance pool (scheduled servicing + tyres + roadside): $10 per month
Admin & risk fees: $10 per month
GST (10%) applied to taxable components: assume GST on maintenance/admin = 10% × ($10 + $10) = $12

Total illustrative monthly payment = $100 + $120 + $10 + $10 + $12 = $152 per month

If you exceed the agreed kilometres, expect excess-kilometre charges (e.g., $1.15–$1.45/km) and higher wear-related costs which increase the monthly effective cost.

Tax, GST and Accounting Treatment (for business users)

This section summarises common treatments. Verify with a tax adviser for your specific circumstances.

GST

GST is generally payable on lease payments and on maintenance charges. Businesses registered for GST can usually claim GST credits on lease payments and related service charges subject to business-use apportionment. See the ATO guidance on leasing assets and GST for more information. For purchases, GST is claimed upfront on the purchase price, subject to input tax credits rules.

FBT (Fringe Benefits Tax)

Full service leases used by the business for an employee's private use can create FBT liabilities. The ATO has specific rules on cars and car fringe benefits. Novated leases often sit within salary packaging arrangements and have different FBT implications.

Deductibility & accounting

Lease payments that represent operating costs (i.e., an operating or full service lease) are generally treated as tax-deductible business expenses over the term for GST-inclusive amounts, subject to apportionment rules. Full service leases are typically off-balance-sheet for the lessee (operating treatment), but accounting standards and reporting requirements may affect presentation. Keep detailed records for BAS reporting and GST claims. Consult your accountant or the Australian Accounting Standards Board for lease accounting standards.

Full Service Lease vs Other Options

Feature	Full Service Lease	Operating Lease	Finance Lease	Novated Lease	Purchase
Who pays maintenance	Lessor (included)	May or may not	Lessee	Employee/employer (varies)	Owner
Balance sheet impact	Often off-balance	Off-balance	On-balance	Depends	On-balance
Predictable monthly cost	High	Medium	Low	Medium	Low
Tax treatment	Operating expense	Operating expense	Depreciation + interest	Salary packaging / FBT	Depreciation / input tax credit
Suited to	Businesses wanting turnkey fleet	Businesses wanting finance-only	Buyers financing purchase	Employee salary-package cars	Owners / long-term holders
Key risk	Contract inflexibility, cost premium	Residual risk	Ownership obligations	FBT rules	Depreciation risk

For more detail on these alternatives, consult specialist leasing resources.

Benefits and Drawbacks

Benefits

Predictable operating cost and simplified budgeting.
Reduced in-house fleet administration and vendor management.
Access to authorised repair networks and negotiated maintenance pricing.
Easier fleet scalability and replacement cycles.

Drawbacks

Potentially higher total cost versus self-managing maintenance.
Contractual inflexibility — early termination can be costly.
Excess kilometre and wear charges can add up.
Possible FBT exposure for employee private use.

Eligibility & Application Process

Typical requirements include business ABN/ACN and proof of trading history, financial statements or BAS statements for credit assessment, director/owner ID and residential details for personal guarantees, vehicle selection details (make, model, optional extras), and desired term and kilometre band.

To speed approval:

Provide recent financials and BAS.
Pre-approve vehicle specs with supplier.
Confirm insurance arrangements if self-insuring.

Providers may run credit checks and request personal guarantees for small businesses. Review expected lead times (vehicle order + delivery) and service commencement dates.

Practical Tips for Choosing a Provider

When comparing full service lease providers, use this checklist:

Compare total cost of ownership (TCO), not just base rent.
Confirm what's included: specifically list tyres, roadside, administration and accident management.
Check SLA response times for roadside assist and repairs.
Review excess-km rates and fair wear and tear definitions.
Inspect end-of-lease return conditions and damage thresholds.
Ask about authorised repair networks and OEM-approved servicing.
Request sample monthly invoices and maintenance reporting.
Verify GST treatment and whether provider issues tax invoices suitable for BAS credits.
Check references from similar-sized fleets.

Sample Monthly Cost Example

Here is an illustrative example (AUD) for a single light commercial vehicle:

List price: $15,000
Term: 48 months
Residual: $12,000 (40%)
Depreciation/month: ($15,000 − $12,000) / 48 = $187.50
Interest & margin: $160/month
Maintenance pool (servicing, tyres, roadside): $120/month
Admin & insurance admin fee: $15/month
GST on services/admin (10%): $15.50

Estimated monthly full service lease payment = $187.50 + $160 + $120 + $15 + $15.50 = $1,018 per month (incl. GST on services)

If you increase the annual kilometres by 25% and exceed the contract band, expect an additional excess-kilometre charge of $1.30/km — for example, 5,000 km excess would add approximately $1,500 spread over remaining months.

FAQ

Is maintenance always included in a full service lease?

Usually scheduled maintenance and common wear items are included, but check the contract for exclusions and caps.

Who pays for insurance?

It depends — some leases include comprehensive insurance; others require you to arrange insurance and claim back costs or pay an additional premium.

Can I buy the vehicle at the end of the lease?

Many contracts allow purchase at the agreed residual value; other options include returning or extending the lease.

Are lease payments tax deductible?

Lease payments are generally deductible as operating expenses for business use, subject to apportionment rules — confirm with your accountant.

What happens if I exceed the kilometre allowance?

You'll incur excess-kilometre charges typically set per kilometre in the contract.

Is a full service lease the same as a novated lease?

No. A novated lease is a salary-packaged arrangement linking employee remuneration and leasing.

Will a full service lease appear on the balance sheet?

Operating leases are often off-balance-sheet for the lessee, but accounting standards and company reporting may require different presentation — consult your accountant.

How do I compare providers?

Use a TCO approach, review SLAs, and check for hidden fees and return conditions.

Key takeaways

Full service leases suit businesses that prioritise predictability and low administrative overhead, offering a turnkey fleet solution with fixed monthly costs. When evaluating options, always compare total cost of ownership rather than headline monthly rent, and carefully review service level agreements, excess-kilometre charges and end-of-lease return conditions before committing.