Save $1000s with a used car novated lease

Novated lease used car options compared

How much is the car you wish to novate?

Yes, you can get a novated lease for a used car

It’s possible to pay for a used car through a novated lease with the same tax benefits that usually apply. In fact, the process works in much the same way whether you’re getting a brand new car or novating a second-hand vehicle.

The only additional restriction on a used car novated lease relates to the age of the vehicle. To be eligible, your car must not be over 12 years old at the end of your lease term.

The used car can be sourced via a dealership or privately, as long as it meets the other eligibility criteria (i.e. must be a passenger vehicle with a payload of less than one tonne).

How does a used car novated lease work?

With a used car novated lease, you can pay for a second-hand vehicle of your choosing, plus running costs, directly through your pre-tax salary via your employer.

Here’s what happens:

  • You find a used car for sale, either from a car dealer or private seller.
  • You apply for a novated lease through a provider like Novated Lease Australia, based on the car you have in mind.
  • If the vehicle is eligible and your application is approved, the lease finance provider purchases the vehicle on your behalf to lease it to you.
  • There’s a GST discount on the purchase price of the used car you’re novating (up to $6,191) if it’s purchased from a dealership (most private sellers are not GST registered so there would be no GST payable anyway).
  • Lease payments are then automatically deducted from your salary by your employer each time you are paid. These salary sacrifice car payments include your car running costs (fuel/charging, insurance, registration/CTP, servicing and tyres).
  • Depending on the type of used car you novate, either all or part of your lease payments are made using your salary before tax is deducted. This lowers your taxable income and tax bill.
  • There’s also a GST discount on any running costs included in your lease payments (no matter where the car was purchased from initially).
Buy your next car with a Novated Lease and save thousands

Used car novated lease: Dealer vs private sale

DealerPrivate sale

Eligible for novated lease



GST discount applied to purchase price



GST discount on running costs



Used car novated lease cost example

Let’s imagine a hypothetical driver, Alan, looking for a second-hand ute. Alan finds a 2021 Ford Ranger at a nearby dealership that fits the bill. Here’s what his costs and savings would look like if he decides to pay for the ute through a novated lease.


Vehicle purchase price (2021 Ford Ranger XLT, double cab 4X4)


GST saving on purchase price


Weekly novated lease payment

$291 (including running costs of $118/week)

Annual tax saving (income tax & GST)


Tax saving over a 5-year lease term


* Calculation is based on a driver in NSW with an annual gross salary of $120,000 driving 15,000km per year. Running costs include: fuel, comprehensive insurance, registration and CPT, servicing and tyres. Pricing is accurate as of December 2023. This is an example for illustrative purposes only based on the assumptions described. Your cost and savings may be different depending on your situation.

Find out how much you could save with a novated lease
Find my best deal

FBT exemption on used EVs through a novated lease

If you’re considering a second-hand EV, the tax savings available through an electric car novated lease are significantly larger. That’s because eligible electric and plug-in hybrid vehicles are exempt from fringe benefits tax (FBT) if paid for through a novated lease.

What that means is you can pay for 100% of your lease and related running costs using your pre-tax salary.

To be eligible, the ATO explains that the vehicle must be valued below the luxury car tax threshold ($89,332 in FY23/24) and it must have been first held and used after 1 July 2022. Used EVs that were in use before that date are not eligible for the novated lease FBT exemption.

Save on EVs with a novated lease

Will a used car novated lease work out cheaper?

The cost of a novated lease is largely based on the cost of the vehicle itself. If the used car you want to drive is cheaper than a brand new option, the cost of your lease will likely be proportionately cheaper too.

But there are exceptions to this rule:

  • As mentioned already, a used EV or PHEV that was first in use before 1 July 2022 will not be eligible for the FBT exemption. If that's the case, a used car would likely cost more under a novated lease (depending on its age) than a more expensive new vehicle that is eligible for the FBT exemption.
  • Novated lease interest rates may be higher on used cars compared to new vehicles in some cases. This could impact the overall calculation for whether a used or new vehicle will work out cheaper (this is also the case with most finance options – e.g. a car loan).
  • If the cost of maintaining the used car (e.g. servicing and replacement tyres) is higher than a similarly-priced new car, your regular novated lease payment could be slightly higher. But again, this would be down to the higher cost of maintaining a used car, which would be the case no matter what way you pay for it. A used car novated lease could actually bring down your maintenance costs considerably compared to other options due to the income tax and GST savings available.

Can I get a novated lease on a car I already own?

Yes, it’s possible to take out a novated lease on a car you already own through a sale and leaseback arrangement.

In this scenario, the lease finance provider purchases your car from you at market value, and then you lease it back from them. In every other respect, the novated lease works just like it would if the lease company had purchased a car on your behalf from a dealer or other private seller.

We find this option is commonly used by people who only became aware of novated leasing after they had already purchased their car.

Novated lease guides

Need more information? Read our easy-to-understand novated lease guides.

Novated Lease Australia
Get the best deal on a novated lease
Find my best deal

Written by

Bevan Guest - NLA CEO


Bevan Guest

Reviewed by

Sean Callery Editor Novated Lease Australia


Sean Callery
Our Office Locations


Level 3, 201 Miller St, North Sydney, NSW, 2060, Australia


Suite 3, Level 2, 1 Taylor Street, Moorabbin, VIC, 3189 Australia


Novated Lease Australia Pty Ltd

ABN: 69 659 639 004

ACN: 659 639 004

© 2023 by Novated Lease Australia