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Saturday, August 9, 2008

End of Novation Period - What Options? Part 4

Say you no longer want the car and simply want to hand it back. There is an option for you. Note: This option is very rarely used as it does not favour the driver in any way.

Option 4 - Hand the Vehicle Back

If the vehicle is handed back to the financier at the end of the Novated Lease period, the financier then auctions the vehicle for the best price offered (no reserve).

What Happens after the Auction?

The money raised from the sale (less costs) is used to pay out the residual amount plus GST of your Novated Lease. If there is a difference between the net funds (from the auction) and the residual amount plus GST, this amount is treated in either of the following ways:

a. Any shortfall between the net sale price and the residual amount plus GST is still the responsibility - and liability - of the driver. (you still owe them money!)

b. Any surplus between the net sale price and the residual amount plus GST is retained by the financier. (They keep it!!)

Summary
You do have a variety of options available to you at the end of a Novated Lease. You can keep the car or not. Whatever option you choose, remember that the residual value must be paid.

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