Can You Swap Cars In A Novated Lease?
Yes, you can swap cars under a novated lease, but the process is more involved than simply switching vehicles. Here’s a breakdown of what’s involved in swapping cars in a novated lease arrangement.
1. No Direct Swapping
Unlike standard leasing agreements, a novated lease doesn’t allow you to directly swap cars during the lease period. If you want to change vehicles, you will need to terminate the existing lease first. There’s no provision for an easy swap without settling the current agreement.
2. Termination of Existing Lease
Swapping cars involves paying off the remaining lease payments and any residual value tied to your current vehicle. Essentially, this means buying out your existing lease before you can take on a new one. The payout figure for your current lease includes:
Remaining Lease Payments: Any outstanding amounts for the remainder of the lease term.
Residual Value: The pre-agreed value of the car at the end of the lease term, which you will need to settle.
Early Termination Fees: You may also face fees for terminating the lease early, so it’s important to check the terms of your agreement.
3. Sale and Leaseback Option
If you don’t want to give up your current car but still want to take advantage of a novated lease, a sale and leaseback arrangement could be a good option. This involves selling your existing car to a finance provider, who then leases it back to you. This way, you can keep your car while enjoying the tax benefits of a novated lease.
4. Starting a New Lease
Once your current lease is terminated, you can start a new novated lease for a different vehicle. This process will involve:
Selecting a new car.
Negotiating the lease terms, including lease payments and residual value.
Entering into a new three-party agreement between you, your employer, and the leasing company.
5. Consider the Financial Implications
Before deciding to swap cars, it’s essential to consider the financial impact:
Early Termination Fees: These can sometimes be significant.
Residual Value: You’ll need to pay this off if you terminate early.
New Lease Payments: Ensure that the payments for the new lease fit within your budget and that the overall financial arrangement still makes sense for you.
Conclusion
Swapping cars in a novated lease is possible, but it requires terminating your existing lease and starting a new one. It’s not as simple as switching vehicles, and you’ll need to pay attention to the financial implications. If you’re considering swapping cars, consult with your novated lease provider to understand the costs and ensure a smooth transition.
Thinking of swapping your car under a novated lease? Contact us today for advice on how to make the process seamless.