Can I get a novated lease on a used car?

Buying a car second hand can save a ton of cash on the ticket price in a showroom – and sometimes the car won’t be much older and might be in decent condition. Considering this, people often assume that the savings associated with a novated lease aren’t available to used car buyers. But that’s not the case, and if you have your eye on a car that’s currently advertised, you can snap it up on a novated lease and access the benefits of that too.

Wait… what the heck is a novated lease?

A quick pitstop for those unfamiliar with the advantages of a novated lease. In a nutshell, this is why they’re popular:

1. Tax savings: You can use pre-tax income to pay for your car and all running costs, meaning that you utilise your full salary before tax to pay for your car and then pay tax on the remaining, lower taxable income. This can save you thousands.

2. GST savings: You won’t pay GST on your car or running costs

3. Wholesale pricing: If you buy a new car, you can save thousands off the ticket price, as novated lease providers can get you access to wholesale pricing

4. Convenient & budget-friendly: Including your running costs with your lease means you get one smoothed, predictable monthly payment – no more bill shock

Obviously, if you buy a used car, you can’t benefit from wholesale pricing, but there’s plenty more there to save you a considerable sum of money compared to buying outright or taking out a car loan. And given the savings you can get on a new car, it might be worth considering whether that’s a viable option for you. After all, a new car will have full warranty and a stronger resale value.

Tips for getting a used car on a novated lease

So what should you bear in mind if you’re all set for a novated lease on a used car? As a general guide, we always recommend:

1. That you purchase a quality second hand vehicle. We recommend choosing a vehicle that still has some factory warranty remaining, so you have the added protection and peace of mind. 

2. That you purchase through a dealership. Purchasing through a dealership lets you avoid paying GST (this doesn’t apply with a private sale as private sellers don’t charge GST). A dealership sale also provides a little more protection for the buyer. But if your heart’s set on a particular private sale car, that’s ok – you’ll still save tax and GST on the car’s running costs.

3. That you buy a vehicle that isn’t too old. Whilst there are always exceptions, the general rule of thumb is that the vehicle cannot be older than 12 years at the end of a lease. For example, you could place a seven-year-old vehicle on a five year lease.