What happens at the end of my Novated Lease?
Life doesn’t come with a roadmap. There are twists, turns, detours and, sometimes, periods of 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.
That could mean upgrading to a new car and new lease; keeping the car you have and extending the lease; paying the residual amount to own the car outright; or trading the car in and perhaps pocketing a little money.
New lease, new car
There’s just something about driving a brand new car! With a Maxxia 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. After all, your life may well have changed since your last lease began – maybe you’ve got a growing family, or the kids have departed the nest, or you’ve moved to the city and need a more fuel-efficient car.
As always, we can help source the car, and handle the setting up of your new novated lease account. We’ll also coordinate the finalisation of your existing one, including trade-in of the vehicle, forwarding the proceeds to your residual balance and transferring any money you made on the sale in post-tax dollars to a nominated bank account.
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. And if your car’s running like a dream, why wouldn’t you keep enjoying the convenience and potential tax benefits of novated leasing?
Pay the residual
Another option is to keep the vehicle and pay the residual amount detailed in your contract.
It’s legislated by the ATO 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.
One of the most popular aspects of novated leasing with Maxxia is access to our Maintenance team – a team of experienced mechanics who will ensure your car is being looked after at service time, and at the best price. With their support, your car could further retain its value at lease end.
*Current residual rates are as follows:
|Lease Term||Residual %|
|60 months (5 Years)||28.13%|
|48 months (4 Years)||37.50%|
|36 months (3 Years)||46.88%|
You could also do 24 months (2 Years) at 56.25%, or 12 months (1 year) at 65.63%.
(*ATO source here.)
You could also trade in the car and, depending on the value of the car at the time of sale, receive a cash injection if the resell is greater than your residual amount. In the event that the amount gleaned is less than the residual, this shortfall can also be refinanced under a new loan.
It’s important to remember, though, that the residual amount needs to be paid with post-tax dollars – meaning funds within your novated lease account cannot be put towards the residual.
So, do you own the car at the end of the lease?
It depends on the path you take. If you decide not to take out a new lease on a new car or extend the lease on your existing one, you’ll no longer have any financial responsibilities on the vehicle once you pay the residual amount owing – and therefore own it outright. (Of course, you’ll still have running costs to fork out for, and, unlike with a novated lease, these will all be paid with post-tax dollars.)
This website contains general information and doesn't take your personal circumstances into account. Seek professional independent advice before making a decision.