Should I refinance or pay my novated lease balloon payment?
Understanding what to do at the end of your novated lease.
We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!
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.
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.
Compare refinancing options now
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
More guides on Finder
Amazon Prime Day Australia 2021: All the best deals from Day 2
Here are all the best deals from Amazon Prime Day Australia's second day - including the return of dirt-cheap Nintendo Switch consoles.
Prime Day deal: $100 off Sony’s ‘Bose Killing’ Headphones
Get 33% off Sony WH1000XM3 Wireless Noise Cancelling Headphones during Amazon Prime Day 2021. Here's how to get the deal before it disappears.
How to get $90.95 off Nintendo Switch with Amazon Prime
Amazon Australia is selling the Nintendo Switch video game console for $349 during Prime Day - that's over $120 off the RRP.
Amazon Prime Day’s best deals on big-ticket items: Up to 46% off
From Segways to stand-up paddleboards, these are the best Prime Day savings on the most expensive items.
Nacon RIG 500 Pro HC Gen 2 review: Super comfortable gaming headphones
The Nacon Rig 500 Pro HC headphones have wide console and PC compatibility, Dolby Atmos licensing and a genuinely comfortable design, even for longer gaming sessions.
Oppo Find X3 Neo 5G review: Oppo’s better flagship phone
The Oppo Find X3 Neo lacks the utter flagship features of the Find X3 Pro, but you won't miss them, while you will enjoy its lower price point.
7 health insurance deals to save you money at tax time
Avoid the MLS tax and get a rebate by taking out health insurance. Here are 7 deals that’ll save you money on your tax returns.
Today’s ASX top stocks: Milton Corporation (MLT ↑16.0%), Oneview Healthcare (ONE ↑12.8%)
The 10 biggest movers on the ASX for Tuesday 22 June 2021.
Mobile plans are now more expensive, but here’s a hack to save $200 a year
Telstra, Optus and Vodafone keep raising their prices even as the rest of the market is more affordable than ever.
Car Loan OffersImportant Information*
You'll receive a fixed rate of 4.99% p.a.
A low minimum borrowing amount of $2,000 that you can use to purchase a new car or one up to two years old.
You'll receive a fixed rate of 4.69% p.a.
Take advantage of a competitive rate, pre-approval and no early repayment fees when you finance a car under two years old.
You'll receive a fixed rate from 4.99% 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.
You'll receive a fixed rate of 4.99% p.a.
Purchase a new or used car up to 2 years old and benefit from a fixed rate and no monthly fees. Pre-approval available within 5 business hours.
Ask an Expert