Specialist Services for Affordable Used Car Novated Lease

Novated Car Leasing with Salary Sacrificing is widely used by employers and employees and can provide a range of benefits to both parties. While predominantly used to acquire new vehicles, salary packaging for used cars can present a cost-effective and beneficial alternative.

As specialists in commercial motor vehicle lending, we have extensive experience in managing Novated Leasing for clients, including for a wide range of second-hand vehicles. We assist both parties to achieve an affordable and workable outcome, at the lowest rates and structured to meet the requirements of both employees and employers. Please contact us to discuss your specific requirements and how we can assist you achieve your objectives.

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Introduction to Used Car Novated Leases

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Salary packaging is a recognised process by which employers purchase goods for employees and deduct an amount from their pre-tax salary to cover the costs. This process is particularly popular with motor vehicles. An employer takes on the leasing of a vehicle for an employee and deducts the costs of the lease and running expenses from the employee’s salary. At the end of the leasing term, the ownership of the vehicle reverts to the employee. From that point, the employee is responsible for all costs of the vehicle and the salary sacrificing arrangement ends.

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The commercial credit facility to affect this is known as Novated Leasing and involves an employee, employer and a lender. All parties must agree to proceed. ‘Novated’ means transferred to. The Lease agreement is novated or transferred from the employee to the employer.

The employee selects the vehicle and then the employer sources a leasing facility to make the purchase. The employer realises the available tax deductions for their business, while the employee may have less tax payable on their salary and receive a vehicle at the end of the lease term.

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The amount of the salary sacrificing is determined between employer and employee as it typically includes the lease payments, insurance, registration, servicing and other running costs. Fringe Benefits Tax may apply, and that cost may also need to be taken into consideration.

To discuss if this arrangement may work for you, speak with one of our expert brokers.
  • Tax benefits for employers.
  • Potentially reduced tax payable for employees.
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Realise the Benefits with Novated Lease for Second-hand Cars

Taking on novated lease for a second-hand rather than a new vehicle may present benefits, especially for the employee. The costs of used cars can be lower than new, allowing the employee to acquire a vehicle with less salary sacrificed. With the lower cost, the option may be accessible to more employees. From another perspective, it may provide the opportunity to purchase an upgraded used model where the new version is considered too expensive.

The employer realises the benefits of tax deductible lease payments and vehicle running costs. By reducing their salary by the sacrificed amount, employees may move to a lower tax bracket, saving them on tax payable. By not taking on the finance themselves, employees may have greater potential to take on finance for other purposes.

Novated Lease may be seen as a special privilege used by employers as an effective measure to offer to employees as an incentive, bonus or in lieu of a pay rise.

Leasing attracts highly competitive interest rates with commercial rates typically lower than personal car loans. Novated Leasing allowing employees to purchase a motor vehicle at the lower business interest rates. Saving on total interest payable on their purchase.

To find out what competitive rates we can source for your Novated Lease, give us a call.
  • Tax-deductible expenses and payments for employers.
  • Less tax paid by employees.
  • Competitive rates, cost-effective interest rates.
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Understand the Financial Implications of Novated Lease for Second-hand Cars

Before proceeding with a Novated Lease, both employee and employer should be aware of all the financial implications of the arrangement.

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For employees, novated leasing involves sacrificing a portion of their salary to cover all expenses relating to the purchase and upkeep of the vehicle. This includes not only the lease payments but the ongoing costs of maintaining, registering and insuring the vehicle. All these costs should be itemised or estimated to ensure the employee has a full understanding of the financial implications on their salary.

Employees should consider how reducing their salary by the required amount may impact their ability to cover their other living expenses and achieve their financial objectives. Not having to take out motor vehicle finance in their own name, may allow an employee greater capacity to take on finance for other purposes.

The salary sacrificed may present savings to the employee through lower tax payable on their reduced salary. Savings may also be realised through acquiring a vehicle at commercial interest rates rather than at personal finance interest rates.

Employers can realise the tax deductions available on lease payments and may utilise a Novated Lease as an opportunity to reward an employee in lieu of a salary increase. But taking on asset acquisition finance may impact their ability to take on finance for other purposes.

Company vehicles used by employees can be subject to Fringe Benefits Tax. This can be an additional expense which may be added to the employee’s salary sacrifice.

Eligibility for a Salary Packaging for Used Cars

To be eligible for Novated Lease on a second-hand vehicle, lender and Australian Taxation Office eligibility criteria must be met. The arrangement must be agreed to by both employer and employee and be in line with ATO salary packaging rulings.

The vehicle must be accepted by the lender as suitable security under a leasing arrangement and the business must meet lender criteria including credit score, financials and documentation.

Your Jade broker will be handling the entire process including finding the lender that offers the best deal and has the criteria to suit the profile and requirements.
  • Meet ATO rulings.
  • Satisfy lender credit, documentation criteria.
  • Specialist brokers to handle Novated Leasing.
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How to Set Up a Novated Lease for a Used Car

We assist employees and employers for a streamlined set-up of a Novated Lease for a second-hand car. Our brokers guide customers through each step, and handle the lender negotiations and arrangements.

  • Employee and employer agree to the Novated Lease.
  • Employee selects vehicle.
  • Jade sources the best rates and terms, on acceptance, finalises the lease.
  • Lease established in employer name.
  • Employer deducts agreed amount from employee salary.
  • Employer makes monthly lease payments.
  • At the end of the term, when all repayments and residual is paid, car ownership is transferred to employee.

Quick Comparison of New v Used Car Novated Leases

There are a number of considerations when deciding whether to take on a Novated Lease on a new or a second-hand vehicle. New car leasing rates may be lower than for used vehicle rates. Repayment comparisons can be made using our Finance Calculator.


The price of a second-hand vehicle would be lower than for the same model new. The leasing payments would be less, and the employee required to sacrifice less towards the monthly payments. But the maintenance on a second-hand vehicle may be higher over the lease term than for a new car. This may increase the overall cost and the amount of the salary sacrifice.


Used vehicle loans can differ from loans for new vehicles and those differences may need to be considered. The cost of insurance and registration on used vehicles can differ from new.


The vehicle resale value at the end of the term may be better for a vehicle purchased new rather than for one purchased second-hand. The resale or value at the end of the term should be considered when deciding on the residual.


For a more in-depth new v used comparison on a particular make or model, contact us for a quote on Novated Leasing for both options.

  • New Car Novated Lease rates lower than for used vehicles.
  • Used car prices lower than new, provides lower repayments.
  • Consider value at the end of the term.
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* The comparison rate displayed is calculated for a loan of $30,000 over 5 years. The results from this calculator should be used as an indication only. Quoted repayments are based on advertised rates and do not include lender fees and charges. Results do not represent either quotes or pre-qualifications for a loan. The specific details of your loan will be provided to you in your loan contract. It is advised that you speak with us so that we can provide you with advice that is tailored to your situation.

DISCLAIMER: This comparison chart is provided for general reference purposes only. It is not in any way intended as a loan application, it is not a quote for business finance or any indication that an application has been received or approved. The rates quoted are for business use where the funds are predominately for business use and may not include all the fees and charges that may be applicable. The interest rates and the repayments displayed do not account for any conditions pertaining to your individual loan application. Therefore the interest rate and repayment you may be offered may vary from the amount shown.

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Used Car Novated Lease FAQ's

  • The employee selects the vehicle for a Novated Lease within the criteria as set by the ATO, the value agreed to by the employer and subject to the vehicle being suitable security by a lender.

  • Interest rates on Novated Lease for second-hand cars is subject to individual lender assessments of the credit position and score of the business.

  • The amount required to be salary sacrificed with Novated Lease includes the monthly lease payments, insurance, registration and servicing costs of the vehicle.

  • If an employee with a salary sacrificed Novated Car Lease leaves the employer prior to the end of the lease term, they need to come to an arrangement with the employer re ownership of the vehicle. The employee may be required to pay-out the outstanding repayments and residual to take ownership.

  • Vehicles subject to Novated Leasing must meet Australian Taxation Office guidelines for salary packaging. In addition, the employer must agree to the amount that is spent on the vehicle and the lender must approve the amount for the financing.

  • Novated means transferred to. In the case of a Novated Lease, the loan is transferred from the employee to the employer.

  • A residual can be included in a Novated Used Car Lease. Residual amounts can be subject to lender and ATO guidelines.

  • Terms of up to 7 years are available for vehicle leasing. Exact terms will depend on lender approval for a specific used vehicle.

  • Both employer and employee must agree to a Novated Lease before the finance arrangement can proceed.

  • A Used Car Novated Lease is taken out in the name of the employer business.

  • No. Employees on a range of salary bands may consider salary packaging.

  • At the end of a salary packaging leasing term, when the employer has finalised the payments and residual, the vehicle is transferred into the name of the employee.