Should I refinance or pay my novated lease balloon payment?

Novated leases can be complicated products, but they offer a convenient way for you to finance a vehicle through your pre-tax salary. When it comes to the end of your novated lease term, you may find yourself with a balloon payment and the question of whether to refinance that payment or take out another lease. We show you how to work out the right option for you.

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What happens at the end of a novated lease?

This depends on the type of novated lease you choose.

• Novated operating lease. You return the vehicle for inspection at the end of the lease.
• Novated finance lease. If the value of the vehicle is less than the residual value, you will be responsible for the shortfall. This results in a balloon payment.

What options do you have?

If you end your novated lease term and you’re left with a balloon payment due to the vehicle being valued at less than the residual value, you have a few avenues you can take. If you’ve saved over the course of your loan term, you can pay the balloon payment in full. If you haven’t saved, you can choose to take out a personal loan to cover the balloon payment, essentially “refinancing” your novated lease. You can also choose to take out another novated lease.

Should you refinance your balloon payment or take out another novated lease?

There is no one answer for this, as it depends on a multitude of factors. By taking these factors into consideration, you can work out which option will be better for your situation:

• How much is your balloon payment? The amount you have to refinance will affect whether it’s worth refinancing or not.
• How long are you planning to keep your vehicle for? The length of time you’re planning to keep your car also needs to be thought about. You should consider the age of the vehicle, the amount of the balloon payment and whether it can be repaid in that time.
• Are you happy with your current vehicle? If you take out another lease, you will be able to get a new vehicle. However, you may want to keep your current vehicle. This is another factor to consider.

Make use of the tools available to you

When deciding whether or not to refinance, you can use finder.com.au’s tools to help make a better informed decision.

• Compare personal loans. Compare rates and fees and read through reviews from banks and other lenders to see if refinancing will be worth it.
• Novated lease calculator. You can use the novated lease calculator on this page to find out the overall costs of your lease.
• Use a personal loan calculator. Calculators including borrowing power, comparison and repayment are available on this page to help you find out the costs of different personal loans.

Deciding whether or not to refinance your novated lease balloon payment doesn’t have to be a complicated decision. With the right tools at your fingertips, you can make the right choice for your needs.

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Name	Interest Rate (p.a.)	Comp. Rate (p.a.)	Application Fee	Monthly Fee	Monthly Repayment
OurMoneyMarket New Car Loan Fixed1 - 7 Years $2,001 - $75,000	Interest Rate (p.a.) 6.57% to 18.99%	Comp. Rate (p.a.) 7.19% to 21.78%	Application Fee $250 min.	Monthly Fee $0	Monthly Repayment $622.82	Go to siteMore Info Compare
Stratton Finance New Car Loan Fixed1 - 7 Years $10,000 - $300,000	Interest Rate (p.a.) 6.52% to 18%	Comp. Rate (p.a.) 6.95% to 23%	Application Fee $395	Monthly Fee $0	Monthly Repayment $625.27	Go to siteMore Info Compare	You'll receive a fixed rate from 6.52% p.a. depending on the lender you are approved with. Apply for up to $300,000 and use cash or trade in a vehicle to use as a deposit. Optional balloon payment available.
loans.com.au - New - Variable Rate Special Variable3 - 7 Years $5,000 - $150,000	Interest Rate (p.a.) 6.24% to 7.74%	Comp. Rate (p.a.) 7.36% to 8.85%	Application Fee $400	Monthly Fee $8	Monthly Repayment $630.83	Go to siteMore Info Compare
IMB New Car Loan Fixed1 - 7 Years $2,000 - $125,000	Interest Rate (p.a.) 6.24%	Comp. Rate (p.a.) 6.59%	Application Fee $274.78	Monthly Fee $0	Monthly Repayment $619.01	More Info Compare	You'll receive a fixed rate of 6.24% p.a. A low minimum borrowing amount of $2,000 that you can use to purchase a new car or one that's up to two years old.
OurMoneyMarket Used Car Loan - No Vehicle Age Limit Fixed1 - 7 Years $2,001 - $75,000	Interest Rate (p.a.) 6.57% to 18.99%	Comp. Rate (p.a.) 7.19% to 21.78%	Application Fee $250 min.	Monthly Fee $0	Monthly Repayment $622.82	Go to siteMore Info Compare
Stratton Finance Used Car Loan Fixed1 - 7 Years $10,000 - $300,000	Interest Rate (p.a.) 6.52% to 18%	Comp. Rate (p.a.) 6.95% to 23%	Application Fee $395	Monthly Fee $0	Monthly Repayment $625.27	Go to siteMore Info Compare	You'll receive a fixed rate loan from 6.52% p.a. with a comparison rate of 6.95% p.a. A used car loan of up to $300,000 with quick approval times and balloon payment options.
loans.com.au - Variable Rate Used Car < 5 years Variable3 - 7 Years $5,000 - $150,000	Interest Rate (p.a.) 7.74% to 7.74%	Comp. Rate (p.a.) 8.85% to 8.99%	Application Fee $400	Monthly Fee $8	Monthly Repayment $644.82	Go to siteMore Info Compare
RACV New Car Loans Fixed1 - 7 Years $5,000 - $150,000	Interest Rate (p.a.) 7.29% to 16.99%	Comp. Rate (p.a.) 8% to 17.77%	Application Fee $499	Monthly Fee $0	Monthly Repayment $635.67	Go to siteMore Info Compare	You'll receive a fixed rate from 7.29% p.a. A larger loan of $5,000 or more to help you buy a new or used car. 5-hour pre approval available and no ongoing fees.
RACV Used Car Loans Fixed1 - 7 Years $5,000 - $150,000	Interest Rate (p.a.) 8.49% to 16.99%	Comp. Rate (p.a.) 9.21% to 17.77%	Application Fee $499	Monthly Fee $0	Monthly Repayment $647.01	Go to siteMore Info Compare	You'll receive a fixed rate from 8.49% p.a. Benefit from no ongoing fees, 5-hour approval and a 21-day satisfaction guarantee. Interest rate discounts for members.
Verified Lending Used Car Loan Fixed1 - 7 Years $10,000 - $200,000	Interest Rate (p.a.) 7.1% to 18.99%	Comp. Rate (p.a.) 8.06% to 22.99%	Application Fee $395	Monthly Fee $0	Monthly Repayment $630.67	More Info Compare
NRMA New Car Loan Fixed1 - 7 Years $5,000 - $130,000	Interest Rate (p.a.) 7.29% to 16.99%	Comp. Rate (p.a.) 8% to 17.77%	Application Fee $499	Monthly Fee $0	Monthly Repayment $635.67	More Info Compare	Note: Take out a loan for an eligible electric vehicle and receive a 1.5% discount on your personalised interest rate (interest rates start from 5.79% p.a. and comparison rates from 6.49% p.a.)
NRMA Used Car Loan Fixed1 - 7 Years $5,000 - $130,000	Interest Rate (p.a.) 8.49% to 16.99%	Comp. Rate (p.a.) 9.21% to 17.77%	Application Fee $499	Monthly Fee $0	Monthly Repayment $647.01	More Info Compare	You'll receive a fixed rate from 8.49% p.a. Finance a used car with NRMA and benefit from a fixed rate term and no monthly fees. Pre-approval available within 5 business hours.

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Written by

Elizabeth Barry

Lead Editor

Elizabeth Barry was the lead editor for Finder. She has over 10 years' experience writing about a range of topics with a focus on personal finance. You’ll find her writing and commentary in a range of publications and media including Seven News, the ABC, MSN, the Irish Times and Singapore Business Review. See full bio

Elizabeth's expertise

Elizabeth has written 239 Finder guides across topics including:

• Banking
• Personal finance
• Investing