Novated leasing for used cars

What is a novated lease on a used car?

Novated leasing is a salary packaging arrangement with your employer that lets you use pre-tax income for car finance and expenses. It’s not limited to brand new cars.

By leasing a second-hand car with our sister company Smart, you could save thousands every year in income tax.

Generally, used cars can be salary packaged on a novated lease if the vehicle is less than 20 years old at the end of the lease term with a minimum value of $5,000*.

 

Benefits of leasing a used car through a novated lease

Salary packaging a used car through a novated lease can give you the same tax benefits as leasing a new one.

  • Lower purchase prices could mean smaller lease payments
  • Used cars may depreciate slower compared to new cars~
  • No GST on the purchase price when purchased via a dealer^
  • GST discount on running costs, no matter how you buy your car
Step by step guide: How to get a novated lease on a used car
Choose your carPick a used car from a dealership or private seller. The car will need to meet the criteria of the financier – generally that the car is less than 12 years old at the end of the lease term with a minimum value of $5,000.
Set up the novated lease with SmartFrom setting up the lease to coordinating with your employer – Smart will do all the legwork to make it simple for you. Speak with one of our dedicated consultants to finalise your lease package and finance application.
Drive & EnjoyYour lease payments and running costs are deducted from your salary.

Use our novated lease used car calculator

Smart’s novated lease calculator can provide you with estimated tax savings and novated lease payments for used cars.

You can get instant results, and it’s simple to use.

You start by choosing your preferred car. For a used car, you can adjust the year of the car, and it may show a default price based on Redbook’s estimated median value for the make, model and year you select. This can be adjusted, for instance, if you know the payment price of the used car you want.

You can then go through a few simple steps to refine your choices, such as estimated running costs. The estimated tax savings and novated lease payments are updated and shown as you go.

What to consider when leasing a used or second-hand car?

  • Vehicle age and condition: You need to ensure that the used car meets the eligibility requirements of the chosen financier. Generally, the used vehicle must be less than 12 years old at the end of the lease term with a minimum value of $5,000.
  • Dealer vs. Private purchase: The tax benefits can vary depending on whether you purchase the used car via a dealer or private sale. When you purchase through a dealer there is no GST on the purchase price^. However, this tax benefit is generally not relevant to private sales as most do not attract GST.
  • Inspection & Valuation: The used car may require a formal inspection before being approved for the lease, if the used car is purchased via private sale.

Used Car FAQs

  • Is insurance included in a novated lease for used vehicles?

    It’s a requirement of a novated lease that full comprehensive car insurance is taken out on the vehicle.

    This insurance can be bundled into your regular lease payments, along with other running costs like fuel, servicing and rego. This can make budgeting easier.

  • How much tax can I save with a novated lease on a used car?

    This depends on many factors, such as how the used car was purchased (dealer or through private sale), the type of vehicle and your income.

    Smart’s novated lease calculator can provide you with the estimated tax savings that are relevant to you.

  • When leasing a used car, do I have to buy it first?

    No, just pick your preferred car and provide the details of the dealer or private seller to your dedicated leasing consultant, and they will help procure the car for you.

  • Are used electric vehicles (EVs) eligible for the Fringe Benefits Tax exemption?

    When you lease an eligible electric vehicle (EV), 100% of the lease and car costs come from your before tax income and are exempt from the Fringe Benefits Tax, due to the Electric Car Discount.

    The vehicle must also be under the Luxury Car Tax threshold, which is $91,661 in FY 2026-27. This can apply to used EVs, so long as the car was first registered after 1 July 2022.

  • Can you lease a used car?

    Yes, it’s possible to lease a used car and it’s a popular option with many benefits. Generally, used cars can be salary packaged on a novated lease if the vehicle is less than 12 years old at the end of the lease term with a minimum value of $5,000.

    The financier chosen may have certain criteria which must be met in order to salary package the used car.

Disclaimers

This is general information only. Before entering into any salary packaging or novated leasing arrangement, you should consider your objectives, financial situation and needs, and seek appropriate legal, financial or other professional advice based upon your own particular circumstances. The availability of benefits is determined by your employer. Conditions and fees apply. Smartsalary Pty Ltd, ABN 24 096 796 100, a Smart™ company.

* To package a used or current car, certain financier requirements must be met. Exact age requirements and minimum value depend on which financier you choose.

~ Source: Should I buy a new or used car? Is a new car worth the cost? | RACV.

^ GST savings are calculated on the FBT base value of the vehicle, up to the claimable limit [$6,353 in FY 2026-27] unless exempt.