Understand the choices that may be available when your lease ends
As your lease approaches its end date, you'll have several options to consider. The right choice will depend on your circumstances, budget, and whether you'd like to keep driving your current vehicle or move into something new.
Option 1
Sell your current vehicle, pay out the residual value, and start a fresh novated lease on a new car. If the vehicle sells for more than the residual, any surplus is yours to keep.
Option 2
Happy with your current vehicle? Simply extend the lease term and continue driving it for longer without any disruption to your salary packaging.
Option 3
Pay out the residual value and take full, outright ownership. The novated lease ends here and tax benefits no longer apply - best suited for those retiring or leaving employment.
With a novated lease it’s as if you are ‘renting’ your vehicle (on a long term basis) from a finance company, and your rental payments reduce the amount owing on the car. However, the ATO only allows you to pay down a certain percentage of the price of the car. The amount remaining, when you’ve paid down as much as you’re legally allowed to – is the residual.
Residual values are set at the start of your lease and are based on ATO guidelines, taking into account factors such as the lease term and expected vehicle depreciation.
In some circumstances, a different residual value may be available, such as for customers with particularly high annual kilometres. Speak with our team to discuss your options.
Once your lease has started, your residual value cannot be changed. The only exception is if your lease ends and you enter into a new refinanced lease, at which point a new residual value may apply.
Once the residual value is paid, you will own the vehicle outright, and your tax benefits will end.
We recommend reviewing your options several months before your lease ends to give you time to decide whether you'd like to upgrade, extend your lease, or take ownership of the vehicle.
