End of Lease – What Should I Do?
Is your Novated Lease due to expire soon? Are you wondering what to do with your impeding residual value? This month ProNovate walks you through the options available and what could end up being a significant way to maximise your savings on a Novated Lease.
- Trade in your car for a new model
This is the most popular option taken by our clients. By trading in the current vehicle, the changeover process is smooth and hassle free. ProNovate can assist to ensure that the trade in price is a good as possible, with any amount above your residual value paid to you tax-free. For example, if your residual value is $15,000, and you can trade your vehicle in for $20,000, you stand to make $5,000 tax free.
This option is particularly beneficial for people wanting a vehicle of similar price than their original lease – their repayments remain exactly the same all while upgrading to the newest model with improved safety, fuel economy, styling, warranty and features.
- Sell your car privately and get a new lease
This is much like option ‘1’ above, however by selling your car privately can allow you to sell your vehicle for a higher price and maximise tax-free profit on resale.
Clients choosing this option should be aware of the added time to sell your vehicle privately however this option can usually provide the best net changeover.
- Extend the Lease Term
Love your car so much you’re not ready to see it go just yet? That’s ok; because you also have the option of simply extending your lease for a further one or two years, paying down the residual value tax effectively even further whilst continuing the benefits of having your running costs managed for you.
Whilst your repayments will usually go down during the extension period, we would suggest that you consider factory-backed extended warranty. ProNovate can assist you with organising extended warranty whilst setting up your lease extension for you.
- Pay out the lease
Our clients also have the option of paying out the residual at lease end and own the car. It’s important to note that this option offers no further tax benefit and you would be responsible for your running cost management moving forward.
This option is usually taken up by our clients who are moving into retirement however if you are continuing to work, we would recommend that you consider the lease extension option which allows you to continue maximising your tax benefit and free you from investing your hard-earned cash into the depreciating vehicle.
The information contained above does not take into account your personal situation and should not be considered as advice. ProNovate suggests that you obtain your own financial advice before making a decision. If you would like more information about the options available please feel free to contact us using the form set out below: