I recently started a 5 year novated lease.
The car (loan) is valued at x. I thought the residual value was a portion of the x that I pay at the end, but from my payslip, if add up, I’m paying for the full amount x for the 5 years. Then they will require me to pay the residual value on top of it which just doesn’t make sense.
Basically I need to pay x + residual? That seems quite excessive.
Hey @Kimboyeus,
You shouldn't be paying the full car value (X) + the residual.
Your lease repayments cover X minus residual, plus running costs like fuel, insurance, etc.
The residual is a separate amount due only if you want to own the car after the lease ends.
I'd say your payslip might be including all costs together, which would then make it like you're covering the full value.
If you're worried, I'd ask the payroll area, or the third-party leasing company explain the payslip to you.
That's correct, however, it's not excessive as you are getting tens of thousands of dollars on a fixed loan instead of paying for it up front. You have to pay the interest on the full purchase value (x) over the course of 5 years but only pay off the principal that excludes the residual (0.7187x). This is why you have to pay for the residual (0.2813x) + GST (0.02813x) at the end of the 5 years if you want to own the car. Furthermore, you get a tax discount based on your income bracket as well as GST exemption on the non-residual value. Just make sure it's an EV novated lease as normal cars are not worth it at all over a 5 year period, only profitable if it's over 1 year or so due to the FBT that you have to pay. Also, don't lose your job/switch to a company that doesn't work with your novated leasing company as you'll be paying for it 100% out of pocket costing you an extra 50-100%.
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