Many first timers don’t think about, or understand, what happens at the end of a Novated Lease.
The key feature of a Novated Lease that makes them so affordable is the amount you finance.
You are not financing the full purchase price of the car. You are financing the difference between the purchase price and what the car is worth at the end of the lease.
This is referred to as the residual value.
Depending on the car you pick, the lease term and kilometres travelled, the used value of your car will be higher, or lower, than the residual value.
At the end of a Novated Lease you will need to pay out the residual value and it can be a shock if you’re not prepared.
To avoid nasty surprises at the end of the lease you should ask the leasing company to help you ‘forecast’ what your car will be worth at the end when the residual payment is due.
At the end of a Novated Lease it’s simple you usually have three options:
1 Sell the car and pay out the residual value.
2 Pay out the residual value and keep the car.
3 Trade-in the car for a new one and get another Novated Lease.
Option 1 and 3 require you to maximise the sale price to reduce your out-of-pocket expenses.
This means selling the car to a retail buyer which can be a hassle.
Selling the car to a dealer or wholesaler is the easiest option though you are paying for the convenience. The price they offer will be approximately $2,000 to $5,000 less than the
retail market value.
An alternative is to use one of the specialised fleet auction companies. They can guarantee you a minimum sale price and then offer your car to retail buyers to maximise the sale price. Ask your leasing company to find out more.