Key Takeaways
- You can Terminate Early: You can end your novated lease early, but it's treated as a financial termination.
- There will be a Payout Figure: The payout amount typically includes the remaining lease payments, the residual value (balloon payment), and any early termination fees.
- Tax Implications: Ending your lease early may result in the loss of certain tax benefits associated with the novated lease.
- Alternative Options: Depending on your circumstances, there may be other options available to you, such as transferring the lease to another party.
Ending your novated lease early is possible, but like any finance product, there are a few strings attached. Here’s what to expect.
First: You’re Breaking a Finance Agreement
A novated lease is a binding contract for a set period - you get savings for a set period, the finance provider gets security in expected payments for a set period. If you want to exit early, you're essentially terminating that promise with your financier, which usually means:
- Paying out the remaining balance of the lease
- Paying any early termination or admin fees
- Sometimes losing out on any residual value or planned tax benefits
What You'll Need to Pay
Expect a payout quote that includes:
- The remaining finance balance
- Any interest owed
- Fees (can vary by the finance provider)
- There is potential for a shortfall if your car’s value is lower than the payout
Why Do Early Lease Terminations Happen?
The most common reason a driver would end a lease early is due to a loss of job, or needing to change to a different car.
Your Options
- Payout the lease directly (and own the car)
- Transfer the lease to another eligible employer (we're happy to connect with the new employer and get them on board).
- Sell the car and use the funds to cover the payout
- Refinance or restructure the lease payout.
Some employers allow flexibility, others don’t. Always check your contract.
What If I Leave My Job?
If you resign or are made redundant, the lease doesn't disappear — it becomes your responsibility.
You’ll either need to:
- Take over the lease personally
- Find a new employer who will take it on, most employers are willing to do this as part of the job offer
- Pay it out
FBT and salary packaging benefits may also stop if your new employer doesn’t support novated leasing.
Important Considerations
- Your car may be worth less than the payout, depending on market value and timing
- You might lose tax savings if exiting early
