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Should I refinance my balloon payment or pay my novated lease?

Understanding what to do at the end of your novated lease.

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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 come to the end of 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.

Is refinancing worth it?

When deciding whether or not to refinance, compare rates and fees and read through reviews from banks and other lenders to see if refinancing will be worth it.

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

Name Product Interest Rate (p.a.) Min. Loan Amount Max. Loan Amount Loan Term Establishment Fee
The Lending People Car Loan
6.99% - 26.99%
$2,000
$75,000
1 to 7 years
$50 - $695 depending on lender
Eligibility: Be 18+, an NZ citizen or permanent resident, in employment and earning at least $500 per week.
Secured and unsecured car loans of up to $75,000 from a variety of reputable lenders.
Motor Vehicle Finance Secured Vehicle Loan
6.95% - 23.95%
$3,000
$150,000
12 - 60 months
$195 - $995 depending on lender
Eligibility: Must be 18+, be an NZ citizen/permanent resident, and have an income of least $400 per week.
Secured vehicle loans from $3,000.
Better® Secured Vehicle Finance
6.95% - 23.95%
$3,000
$250,000
12 - 60 months
$195 - $695 depending on lender
Eligibility: Must be 18+, be an NZ citizen/permanent resident, and have an income of least $400 per week.
Secured vehicle loans from $3,000.
Simplify Secured Car Loan
6.50% - 12.50%
$5,000
$500,000
12 - 60 months
$276
Eligibility: Must be 18+, a New Zealand resident or permanent citizen and have an income of at least $500 per month.
Secured vehicle finance from $5,000 to $500,000.
MTF Finance Secured Car Loan
8.45% - 20.45%
$2,000
$100,000
3 - 60 months
$376
Eligibility: Must be 18+, be an NZ citizen, resident or have a work visa, and have a regular source of income.
Secured car loans from $2,000.
LoanSpot Secured Vehicle Loan
6.95% - 23.95%
$3,000
$100,000
12 - 60 months
$195 - $995 depending on lender
Eligibility: Must be 18+, be an NZ citizen/permanent resident, and have an income of least $400 per week.
Secured vehicle loans from $3,000.
Pioneer Finance Secured Car Loan
11.95% - 27.95%
$1,000
$100,000
Up to 7 years
$270 - $780 depending on size and security
Eligibility:Be 18+ (may need a guarantor); be a NZ citizen, resident or have a relevant work visa; have a regular source of income.
Secured vehicle loans from $1000 - $100,000.
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