Should you novated lease a used EV instead of buying new?

By changyang1230 · Updated 18 September 2026

It’s a question that comes up constantly: there are plenty of 2023–2024 EVs around with low kilometres, priced well below a brand new equivalent. Does it make more sense to pick up a used one and take advantage of the lower purchase price, rather than getting a brand new EV under a novated lease?

Big topic. Here are some thoughts around it.

Does it make more sense to take advantage of the lower price?

Absolutely, most of the time. To put it simply, buying an EV two to three years old saves you the steepest portion of the depreciation curve, but still nets you the savings achieved from FBT-exempt novated leases.

Depreciation is the single largest cost of owning any car, and it is worst on a new car — a new car loses far more value in its first two or three years than in the years after that. EVs over the past few years have been especially brutal on this front, as new-model prices continue to fall and push used values down with them. Buying a car that has already taken that hit means there is less depreciation left in the car’s future.

A common misconception is that a novated lease is only for a new car. In fact, some novated leasing consultants are reported to have misled people on this, or at least to have steered them in the direction of a new car. The fact is that apart from very old cars (say, eight years or more), you are typically able to lease a car that is some 2 to 3 years of age.

The FBT exemption removes fringe benefits tax on an eligible EV whether it is new or used, and the income tax saving comes from paying the lease and running costs out of pre-tax salary — which works the same way on a smaller amount. While you get a smaller dollar saving on a cheaper car (compared to its cash purchase ownership cost), you will nevertheless spend a lower amount compared to leasing a more expensive new car.

First, check the car is actually eligible

Before any of the above matters, the used EV has to qualify for the FBT exemption at all. Two criteria apply, and the second one catches people out:

• It was first held and used on or after 1 July 2022, and
• Luxury Car Tax has never been payable on it.

To be precise on that second point: it must have never paid LCT. An EV that cost $100,000 new in 2023 but is now worth only $50,000 would not qualify. The test looks at the car’s history, not its price tag today. A car that attracted LCT when it was sold new is permanently ineligible, however far its value has since fallen.

See LCT threshold and FBT exemption for the historical LCT thresholds.

If you buy privately, you lose the GST saving — unless

If you buy privately you often lose out on the “GST savings” aspect, because there is no GST in a private sale for the financier to claim back.

There is a “trick” to still get some GST savings out of it, though this involves getting a willing middleman, which some are finding difficult. In short: a GST-registered dealer buys the car from the private seller and on-sells it to the financier for a fee, which converts the private sale into an ordinary taxable supply and makes the GST credit claimable again.

The full mechanism, the numbers, and what to ask a dealer for are set out in the used-car GST secret.

Savings on the on-road cost

This is an important one that used-car novated leases often get wrong.

The standard invoice by a used car dealer typically doesn’t include the on-road cost of stamp duty, rego transfer fee and so on — as compared to a typical new car purchase, where these are included by default. So the figure you negotiated is the figure for the car, and you then pay for the on-road costs separately e.g. the stamp duty.

In one recent account, that came to roughly $1,200 paid out of pocket to the state revenue office and Service NSW on top of the agreed price. Due to the missing step, that money never went through the novated lease, and therefore was not packaged pre-tax at all.

Ideally you would want to either get the used car dealer to incorporate it for you, or you should just look up the expected stamp duty and transfer fee yourself and get these included in your novated lease financing from the get-go.

What else changes when the car is used

None of these are deal-breakers, but they are the things people consistently report being caught by. They are worth knowing about before you are standing in a dealership.

The car may not come with everything you expect. A new car comes with the full complement of keys, cables and accessories. A used one comes with whatever the previous owner handed over — one key instead of two, no charging cable, no sign of the accessories. Replacement keys for some EVs are genuinely expensive (I learned it the hard way). Check what is included before finalising the deal, and negotiate on price if an important accessory or part is missing.

Deposits and time pressure. Used car dealers often want a holding deposit while the novated lease paperwork is sorted, sometimes with a short deadline attached and the deposit forfeited if it isn’t met. A novated lease has more moving parts than a straight car loan — employer sign-off, provider approval, financier settlement — and it routinely takes longer than a buyer expects. Get the deadline in writing, make it realistic, and check whether your provider will reimburse the deposit once the lease settles. Some do.

Your employer’s approved financier list. A number of employers only accept finance from lenders on an approved list. It is entirely possible to arrange your own finance, get it approved, and then find your employer won’t accept that lender — which means going back to the provider’s own financier and starting again. Confirm this at the beginning, not after you have a loan approval in hand.

Manufacturer used programs versus private sales. Buying through a manufacturer’s own used program typically costs a little more than an equivalent private sale, but it usually brings an inspection, a warranty extension and a fixed price, and it removes the GST problem entirely because it is a dealer sale. Whether that premium is worth paying is a judgement call, but it is not automatically the worse deal.

The value judgement: a cheaper used car versus a pricier new one

Once you accept that used works, a second question appears, and it is not a financial one.

Some people reckon that when there is a deal — say, an effective discount of tens of per cent through the tax treatment — it’s best to “make the most out of it” by going for the higher-valued item. And therefore, between a used Model Y and a new Sealion 7, they might argue for maximising this good deal and getting the latter.

To be honest there is no right and wrong, as they are two conflicting considerations.

• If all you want is to spend the least possible on an EV, then the used car would be the answer.
• However if you indeed value bang for the buck, some people might prefer going for something fresher and better despite the higher overall cost. And this is not inherently wrong, it’s just a different value judgement question.

You want to find out what each option costs you in net terms over the lease — which is exactly what the calculator is for — but it cannot tell you how much a newer car with that new-car smell, a longer warranty and current-generation software is worth to you personally.

You would be surprised by how many people conflate “bang for the buck” with “absolute minimisation of spending”. With the aid of the calculator you could hopefully tease the two apart.

Modelling it

The calculator supports used cars directly. Under Vehicle condition, choose:

• Used – dealer sale, where the price includes GST and the financier can claim the credit; or
• Used – private sale, where there is no GST in the price and therefore no credit — unless you use the dealer middleman approach.

For a used EV it will also ask you to confirm the two eligibility criteria above. Run the used car and the new car as two scenarios and compare the net position rather than the monthly payment.

Key takeaway

Buying an EV two to three years old saves you the steepest portion of the depreciation curve, but still nets you the savings achieved from FBT-exempt novated leases.

Check the two eligibility criteria before you commit, get the stamp duty and transfer fee into the financed amount from the get-go, and be aware that a private sale costs you the GST saving unless you go through a dealer middleman.

Beyond that, whether you take the cheapest EV that works or spend more on something fresher is a value judgement, not a calculation.

Not advice

This page is general information about how novated leases apply to second-hand electric vehicles. It is not financial, tax, or legal advice and does not take your circumstances into account. Eligibility rules, thresholds, and state on-road costs change. Confirm FBT exemption eligibility for a specific vehicle with your lease provider before committing.

See the full disclaimer.

Related reading

• The used-car GST secret — Division 66 and the dealer middleman
• LCT threshold & FBT exemption
• EV FBT exemption wind-back — 2026 Budget announcement
• FBT, RFBA, and adjusted taxable income explained
• An $81k Tesla turned out cost-neutral to keeping a $25k Mazda
• Novated Lease Calculator