When your novated lease term wraps up, you might be wondering, “What happens at the end of a novated lease?” or “Do I own the car at the end of a novated lease?” These are common questions for Australians enjoying the tax benefits and convenience of salary packaging a vehicle through a novated lease. At Easi, we’re here to break down your options clearly, so you can make an informed decision that suits your lifestyle and budget. This guide will walk you through what happens at the end of a novated lease, ensuring you’re ready for the next step in your driving journey.
Understanding the End of a Novated Lease
A novated lease is a tax-effective way to drive your dream car, bundling finance and running costs like fuel, insurance, and maintenance into one payment deducted from your pre-tax salary. Typically lasting 1–5 years, a novated lease comes with a residual value (or balloon payment) set by the Australian Taxation Office (ATO), which is the remaining amount owed at the end of the lease term. When the lease ends, you have several options to choose from, each with its own benefits depending on your circumstances.
Your Options at the End of a Novated Lease
Here’s what happens at the end of a novated lease and the choices available to you:
1. Pay Out the Residual Value and Own the Car
One of the most common questions we hear is, “Do you own the car at the end of a novated lease?” The answer is: you can! If you love your vehicle and want to keep it, you can pay the residual value (plus GST) to own the car outright. This payout can be made using personal funds or by refinancing the residual amount through a new finance agreement. Keep in mind that if you’re no longer employed or can’t use pre-tax salary for the payout, you’ll need to use after-tax funds. EasiFleet can help you calculate the exact payout figure and guide you through the process to make it seamless.
Why choose this option?
You get to keep a car you know and love.
No need to worry about selling or trading in the vehicle.
Ideal if you’re no longer employed or want full ownership without ongoing lease payments.
Tip: Before committing, assess the car’s condition and reliability. Vehicles older than four years may start to incur costly repairs, so weigh this against the residual value
2. Refinance the Residual Value and Extend the Lease
If you’re happy with your current car but not ready to pay the residual value in full, refinancing is a great option. This involves taking out a new lease or finance agreement to cover the residual amount, allowing you to keep driving the same vehicle. Refinancing can be a hassle-free way to avoid selling or trading in your car while continuing to enjoy its familiarity.
Why choose this option?
Spreads the residual payment over a new term, making it more affordable.
No need to go through the process of finding a new vehicle.
Continues the convenience of a novated lease if you’re still employed and eligible.
Tip: Ensure your car is in good condition before refinancing, as older vehicles may require more maintenance, potentially offsetting your savings. Easi’s team can assess your vehicle’s suitability and tailor a refinancing plan to your needs.
3. Trade In or Sell the Car and Start a New Lease
If your needs have changed—perhaps you want a more fuel-efficient model, an electric vehicle (EV), or a car better suited to a growing family—you can sell or trade in your current vehicle and use the proceeds to pay off the residual value. Any surplus between the market value and the residual (plus GST) is yours to keep, tax-free. You can then start a new novated lease with a different vehicle, taking advantage of Easi’s fleet discounts and tax benefits.
Why choose this option?
Upgrade to a newer, more suitable vehicle with the latest features.
Take advantage of EV tax exemptions or state rebates, like Queensland’s $6,000 rebate for zero-emission vehicles.
Potentially pocket a profit if your car’s market value exceeds the residual.
Tip: Most leasing companies, including Easi, don’t take the vehicle back at the end of the lease, but we can assist with selling or trading it in, though the best price isn’t guaranteed.
4. Hand the Car Back (Limited Cases)
In rare cases, some leasing providers may offer to take the car back at the end of the lease, but this isn’t standard practice with Easi. If this option is available, it typically means forfeiting any potential surplus value, and you may not get the best price for the vehicle. This choice is less common and usually only suits specific circumstances, so speak with our team to explore if it’s viable for you.
Key Considerations at the End of a Novated Lease
To make the best decision, keep these factors in mind:
Residual Value: The ATO sets minimum residual values based on the vehicle’s effective life (8 years). Ensure the residual aligns with the car’s market value to avoid owing more than it’s worth. Easi provides transparent quotes showing residual values (excluding and including GST) upfront.
Car Condition: Older vehicles may face mechanical issues, so factor in future maintenance costs if you plan to keep or refinance the car.
Employment Status: If you’re no longer employed or your new employer doesn’t offer novated leasing, you can still own the car by paying the residual or continue payments like a standard loan, but you’ll lose pre-tax benefits.
Market Trends: If you’re considering a new lease, check for incentives like EV FBT exemptions or state rebates, which can save you thousands. For example, NSW offers a $3,000 rebate for eligible EVs.
Surplus Funds: Any unspent funds in your maintenance account (e.g., for fuel or servicing) are returned to you at the end of the lease, giving you extra cash to put toward your next move.
Why Choose Easi for Your Novated Lease Journey?
At Easi, we make the end of your novated lease as smooth as the start. Our Australian-based team offers personalized support, ensuring you understand every option and its financial impact. Whether you’re paying out the residual, refinancing, or starting a new lease, we handle the paperwork and provide expert advice to maximize your savings. Plus, our best price guarantee means you’ll always get a competitive deal.
Ready to Plan for the End of Your Novated Lease?
The choice is yours - keep the car, refinance, upgrade, or, in rare cases, hand it back. Easi is here to guide you every step of the way, ensuring your decision aligns with your financial goals and lifestyle.
Get in touch with our novated lease specialists today to explore your options or use our novated lease calculator to see how much you could save on your next vehicle. Drive smarter, save more, and let Easi make it Easi.
