Step 6: Plan for lease end
Start thinking about end-of-lease options from day one — the residual payment is the biggest financial event in your lease.
Understanding your residual
Your quote shows the residual (balloon) value — the lump sum payable at lease end to take ownership. This is set at ATO minimums based on lease term. On a $60,000 car with a 36-month lease, expect approximately $28,128 plus GST.
The residual must be paid from after-tax income. You cannot reduce it with extra pre-tax payments during the lease term.
When to start planning
Contact your provider 6–12 months before lease end to discuss options. 3 months out, get a formal payout letter showing the exact residual amount including GST.
- Pay residual and keep the car (buyout)
- Refinance the residual into a new novated lease
- Trade in and upgrade to a new vehicle
- Sell privately and pay the residual from sale proceeds
Trade-in often creates equity
On well-maintained vehicles, market value at lease end frequently exceeds the residual — especially for popular models and EVs. This equity is yours to keep if you trade in or sell privately. Your provider can arrange a valuation 3 months before lease end.
Key takeaways
- Residual is payable from after-tax income plus GST
- Start planning 6–12 months before lease end
- Trade-in value often exceeds residual on well-maintained cars