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 SmartTM, 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
Step 1: Choose your car
Pick 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.
Step 2: Set up the novated lease with Smart
From 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.
Step 3: Drive and enjoy
Your lease payments and running costs are deducted from your salary.
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.
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.
Important Information
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 [$6,334 in FY 2025-26] unless exempt.