End-of-lease options
Four paths when your novated lease term finishes — buy, refinance, trade-in, or sell.
Pay residual and keep
Pay the balloon payment (plus 10% GST) from after-tax funds to own the vehicle outright. Best when the car suits your needs and market value exceeds the residual. You'll need to arrange registration transfer and ongoing insurance yourself.
Refinance the residual
Enter a new novated lease financing only the residual amount. Monthly cost is lower since you're financing a much smaller sum. Running costs can still be packaged. This extends tax benefits if your employer continues salary packaging.
Trade in and upgrade
Sell or trade the vehicle through your provider or a dealer, use proceeds to pay the residual, and start a new novated lease on a new car. Any equity above the residual is yours to keep. Popular for employees who want a new vehicle every 3–5 years.
Sell privately
Sell the car on the private market, pay the residual to the financier from sale proceeds, and keep any profit. Requires managing the sale yourself and ensuring the vehicle is free of encumbrances. Can yield the best price but takes more effort.
Key takeaways
- Residual is always payable from after-tax income plus GST
- Refinancing is the lowest-impact option if you want to keep the car
- Trade-in often creates equity on well-maintained vehicles
- Start planning 6–12 months before lease end