Do You Own A Car After A Novated Lease?

At the end of a novated lease, whether you own the car depends entirely on what option you choose. Here’s a breakdown of the main possibilities you can consider.

Pay the Residual Amount:

If you want to own the car outright, you'll need to pay the residual value stated in your lease agreement. Once this payment is made, the car is yours with no further financial obligations related to the lease itself. However, you will now be responsible for the running costs such as insurance, fuel, and maintenance, which will need to be covered with post-tax dollars.

Refinance the Residual Value:

If paying the lump sum for the residual amount isn't feasible, you can opt to refinance. This involves entering a new lease agreement that covers the residual value, allowing you to continue using the car without a hefty upfront payment. This can be an attractive option if you like the vehicle but aren't ready to buy it outright.

Upgrade to a New Vehicle:

Another option is to upgrade to a new car. You can trade in your current vehicle, and its trade-in value can be used to offset the residual amount. If the trade-in value exceeds the residual, you keep the difference, and it’s tax-free! On the other hand, if the trade-in value is less than the residual amount, you’ll have to pay the difference.

Extend the Lease:

If you’re happy with your car and don’t want to pay the residual or upgrade, extending the lease is another possibility. This could result in lower payments and allow you to continue enjoying the benefits of a novated lease without committing to buying the car outright.

In summary, while you can own the car after a novated lease by paying the residual amount, you also have options to refinance or trade in the vehicle. The choice really depends on your financial situation and personal preferences.

Considering a novated lease or do have more questions? Reach out to us today to explore your options!