What happens at the end of my Novated Lease?
Life doesn’t come with a roadmap. There’s twists, turns, detours and, sometimes, smooth sailing.
So as you near the end of your novated lease, you might be wondering, “where to now?”
Thankfully, you have a car-load of choice, and as your novated lease draws to a close a Maxxia consultant will be in touch to discuss the best direction to go.
Get that new car feeling
There’s just something about driving a brand new car! With a novated lease, you can swap your current car for a brand new one. You could choose the latest model of your current car, or upgrade to something completely different.
Perhaps life might’ve changed since your existing lease began?
Maybe you’ve got a growing family and need something bigger.
Or the kids have departed the nest and you need to downscale.
Or you’ve moved to the city and need a more fuel-efficient car.
Or you’re after an off-roader for ‘The Big Lap’ around Australia.
Whatever your need, Maxxia can help to make it happen.
Extend your existing lease
Got a connection with your existing wheels and not ready to let go? You have the option to extend your current lease – possibly at lower payments – so you can continue to enjoy all the convenience and potential tax benefits.
One benefit of extending your lease is that the longer the novation agreement, the lower the residual payable.
Pay the residual
Another option is to keep the vehicle and pay the residual amount detailed in your contract.
It’s legislated that all novated leases require a residual – or “balloon” – amount to be paid at the end of the lease. (The amount of the balloon payment depends on the lease duration and the value of the car at lease end.)
You could also trade in the car and, depending on the value of the car at the time of sale, receive a cash injection, or pay any residual amount. If cash flow is tight, this amount can also be refinanced under a new loan.
Residual amounts need to be paid with post-tax dollars – meaning funds within your novated lease account cannot be put towards the residual.
If your budget allows it, try to put some money aside so that the balloon payment is accounted for when it’s due. Let’s say your residual is $5,000, you’re paid fortnightly and your lease is over five years (or 130 fortnightly pays). Dividing $5,000 by 130 gives you $38.46. So if you save $38.50 each fortnight you can avoid “bill shock” at lease end!
As the end of your novated lease approaches a Maxxia consultant will be in touch to discuss the best direction to go. Or feel free to call 1300 123 123 at any time.
This website contains general information and doesn't take your personal circumstances into account. Seek professional independent advice before making a decision.