Used Car Novated Lease

  • The benefits are the same for a novated lease on a used car.
  • Used cars are eligible provided they are less than 15 years old at the end of the lease.

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Salary packaging a car
Salary packaging a car

Used car novated lease benefits

Best match guarantee

GST saving on the vehicle (up to $6,191)

Consolidating debt

Your lease payments are made pre-tax

Novated Lease

Bundle your car running costs for extra savings

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Shopping around for the right novated lease can save you thousands of dollars in interest and fees.

In our used car novated lease guide:













Can I finance a used car with a novated lease?

Yes, you can use a novated lease to finance a used car. Just like you would if you were buying a new car.

The advantages and disadvantages are mostly the same. So is the process for getting your lease established.

In fact, taking out a novated lease on a used car is quite a common option in my experience.

Some people just don’t like the idea of buying a brand new car. Or they have a tighter budget and a used car makes sense. Long wait times for new cars are also a factor for a lot of people.

But there are a few key points you should think about before you decide if novating a used car is going to be worth it.

What kind of car will get you the best loan with Money Matchmaker

What is the maximum novated lease used car age?

With a used car novated lease, you need to think about how old the vehicle will be at the end of the lease term.

The maximum end-of-lease age is generally 15 years (with some providers the max age is 12).

Most novated lease terms are 5 years, although they can be shorter.

So the maximum current age of the car you’re buying will generally be 10 years.

Qualify for a novated lease

Can I novate a used car bought from a private seller?

Yes you can.

Most novated lease companies will facilitate a private sale (the other option being a private sale car loan).

They’ll buy the car on your behalf and then you’ll make payments on it from your salary just like you would with a novated lease for a new car.

The main difference with a novated lease on a private sale is the GST (goods and services tax).

Private sellers generally don’t need to charge GST, so you won’t make a saving on the sale price like you would if you were buying a used car from a dealer through a novated lease.

Of course there won't be a GST saving either way if you opt for a used car loan over novated leasing.

The maximum GST saving is $6,191 depending on the vehicle's price (for the FY2023/24 financial year), so this can make a big difference.

Let’s look at an example.

You see two identical models for sale. One from a dealer and one from a private seller.

The private sale might look cheaper on the face of it, but it’s worth factoring in the GST saving on the dealer price.

You'll still get GST savings on ongoing car running costs with a fully-maintained novated lease whether you buy the used car privately or through a dealer.

Novated lease used car GST example: Dealer vs private sale

DealerPrivate sale

Purchase price



Novated lease GST discount



Cost to you



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See how much you could save on a used car plus running costs with a novated lease. Get a personalised, no-obligation quote today.

Car Maintenance and Servicing

What happens with my novated lease if there are issues with the vehicle?

Buying a used car generally means higher maintenance and repair costs.

After all, the car may no longer be covered by a warranty and capped-price servicing.

To reduce risk on a used car novated lease, it’s usually a requirement to have the vehicle checked by an independent mechanic before you can enter into the agreement.

You’ll generally also make contributions from your salary to cover ongoing servicing and repairs. That's in addition to the standard costs you can include, like comprehensive car insurance, registration and CTP.

The novated lease provider will help you estimate a suitable budget for these based on the age and condition of the car.

But if the repair costs exceed the lease budget, it will be your responsibility to cover these.

You can cover extra repair costs either by:

  • Increasing the lease contributions you make from your salary (with a GST saving), or
  • Paying for them from your after-tax salary or savings (without a GST discount on the repairs)

Either way, it’s in your interest to buy a used car that’s in good condition and unlikely to need extensive repairs during the lease.

What are the benefits of a novated lease for a used car?

Here are the main benefits of a novated lease versus a car loan as a way of financing a used car:

What are the drawbacks of a used car novated lease?

And here are some of the possible drawbacks of a novated lease for a used car:

  • You’ll need to make a residual payment at the end of the lease to own the car outright
  • You may need to pay fringe benefits tax
  • Your repayments are linked to your salary which can mean things get more complicated if you move jobs or take unpaid leave
  • For things like repairs and maintenance, you may need to use the novated lease company’s preferred provider rather than the ones that’s most convenient for you.

Most popular used cars in Australia 2023

  1. Ford Ranger XL (average used price $26,516.24)
  2. Toyota Hilux SR ($32,351.19)
  3. Holden Colorado LS ($24,889.77)
  4. Toyota RAV4 GX ($24,126.26)
  5. Toyota Camry Ascent ($21,046.82)
  6. Nissan X-TRAIL ST ($20,736)
  7. Toyota Corolla Ascent ($17,803)
  8. Isuzu D-MAX SX ($26,490.51)
  9. Toyota Kluger GX ($33,000.81)
  10. Toyota Hiace ($31,889.90)

Source: Datium Insights, February 2023

Shopping around for the right loan can save you thousands of dollars in interest and fees.

Novated lease guides and resources

Find out more about the possible savings, benefits and things to watch out for, plus your range of options with a novated lease in Australia.

Written by

Shaun McGowan founder

Loans Expert

Shaun McGowan

Reviewed by

Sean Callery Editor


Sean Callery