Yes, you can.
In 2026, it is still possible to put a used car on a novated lease in Australia. Many people assume novated leasing only applies to brand-new vehicles, but that is not the case.
Used cars, and even cars you already own, can be structured under a novated lease if they meet certain eligibility requirements.
If you want to see how a used vehicle compares financially, you can run your numbers using your salary and the car you’re considering.
How a Used Car Novated Lease Works
A used car novated lease works in a very similar way to a new car lease.
It is still a three-way agreement between:
- you (the employee)
- your employer
- the leasing provider
The main difference is that instead of financing a new vehicle, the lease is based on a second-hand car.
Your payments, including running costs, are typically bundled and deducted from your salary.
This structure allows vehicle costs to be managed through salary packaging, which can change how the total cost is calculated.
Key Eligibility Rules for Used Cars
Not every used car will qualify.
To be eligible for a novated lease in Australia, most financiers require:
- the car must not be too old at the end of the lease (commonly under ~12 years)
- the vehicle must meet minimum value requirements
- it must be a standard passenger vehicle (not heavy commercial use)
- the car must pass inspection if privately purchased
These rules ensure the vehicle holds enough value over the lease term.
Can You Use Your Existing Car?
Yes, this is called a sale and leaseback.
In this scenario:
- a finance provider purchases your current car
- you lease it back under a novated structure
- payments are then made through your salary
This option is often used by people who already own a car but want to restructure their costs.
Used Car vs New Car Novated Lease
| Factor | Used Car Novated Lease | New Car Novated Lease | Why It Matters |
|---|---|---|---|
| Purchase Price | Lower upfront cost | Higher purchase price | Affects repayments |
| Running Costs | May be higher (older car) | Typically lower | Impacts total cost |
| Interest Rates | Sometimes higher | Often lower | Affects overall lease |
| Tax Treatment | Similar structure | Similar structure | Both use salary packaging |
| EV Benefits | Limited unless eligible | More likely eligible | Affects tax outcomes |
What About Tax Benefits?
A used car novated lease can still provide tax advantages, because:
- payments may be structured through pre-tax salary
- running costs are bundled into the lease
- GST savings may apply in some cases
However, there are some important differences in 2026.
EV Exception
Only certain electric vehicles qualify for FBT exemption, and eligibility depends on when the vehicle was first used and its value
This means:
- a new EV may have stronger tax advantages
- some used EVs may not qualify
When a Used Car Novated Lease Makes Sense
A used car may be worth considering if:
- you want a lower purchase price
- you are trying to reduce monthly payments
- you prefer a specific model that is no longer new
- you already own a vehicle and want to restructure it
To compare a used car against a new one properly, it helps to use our calculator with the same assumptions.
When a New Car Might Be Better
A new car may be more suitable if:
- you want lower maintenance costs
- you are considering an EV with tax advantages
- you prefer warranty coverage
- you want more predictable running costs
This is why comparing both options side-by-side is important.
A novated lease savings calculator helps you test both scenarios before deciding.
The Key Trade-Off
The decision between a used and new car comes down to:
- upfront cost vs long-term cost
- running costs vs purchase price
- tax treatment vs eligibility
A cheaper used car does not always mean a cheaper overall outcome, especially when running costs and tax rules are considered.
Making the Right Choice in 2026
Used car novated leases remain a flexible option in 2026, but they require more careful evaluation compared to new vehicles.
Understanding:
- vehicle eligibility
- running costs
- tax implications
is essential before committing.
As a specialist in Australian novated leasing, Fingo helps employees understand how different vehicle options can be structured so they can make more informed decisions.
Frequently Asked Questions
Is a used car novated lease cheaper than a new one?
It depends. While the purchase price is lower, running costs and interest rates may offset the difference.
Can I novate a car I already own?
Yes. This is called a sale and leaseback arrangement, where your car is refinanced into a novated lease.
Do used cars get the same tax benefits?
In many cases, yes. However, some EV-specific benefits may not apply depending on eligibility.
Are running costs included in a used car novated lease?
Yes. Costs such as fuel, servicing and insurance are typically bundled into the lease.
What is the best way to compare used vs new cars?
The most reliable approach is to calculate your savings using consistent assumptions such as salary, vehicle price and running costs.
