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The plain-English guide

What happens at the end of a novated lease?

The end of the lease is the part people worry about most, usually because other providers keep it vague. It is actually simple, and with us every figure is set out in writing before you start. Here is exactly what happens, and what it costs.

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The residual, in plain terms

A novated lease runs for a set term, and at the end there is a residual: a final amount that clears the car. It is not a penalty and it is not a surprise. It is set by the ATO to a minimum percentage of the vehicle price, and it is printed on your quote from day one.

What the residual costs

The percentage depends on how long you lease for. The longer the term, the lower the residual, because you have paid more of the car off along the way.

  • 1 year: 65.63%
  • 2 years: 56.25%
  • 3 years: 46.88%
  • 4 years: 37.50%
  • 5 years: 28.13%

You will see the exact dollar amount for your car, on your term, in the calculator before you commit to anything.

Your three choices at the end

  • Own it. Pay the residual and the car is yours, free of the lease.
  • Trade or sell. Sell the car, pay out the residual, and keep anything above it.
  • Re-lease. Start a fresh novated lease on a new car and keep the tax benefit rolling.

Why there is no surprise

The reason the end of a lease scares people is that some providers leave it vague at the start, then the bill lands. We do the opposite. The residual, the term and every fee are on your quote in writing before you sign, and they do not change. When it is all printed from day one, the end of the lease is just the plan working exactly as you were shown. See what your residual would be in the calculator.

Common questions

What is the residual on a novated lease?
It is a set final amount owing at the end of the term, worked out to the ATO minimum for your lease length. It is not a surprise fee. It is known, and printed on your quote, from the very first day.
How much is the residual?
It is a percentage of the vehicle price set by the ATO, based on the term. For a five year lease it is 28.13 percent, for three years 46.88 percent. You see the exact dollar figure on your quote before you sign anything.
What are my choices at the end?
Three. Pay the residual and own the car outright, sell or trade it in and keep anything above the residual, or start a fresh lease on a new car. You decide at the end, not the start.
Can the residual change during my lease?
No. It is fixed when you start and printed in your agreement. It does not move, and we do not add anything to it.
What if the car is worth more than the residual?
Then you are ahead. Sell or trade it, pay out the residual, and the difference is yours to keep. EVs and popular models often hold their value well.

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