Saturday, August 9, 2008

End of Novation Period - What Options? Part 3

If you don't want to keep the car you novated - maybe you want to move on to bigger and better things - you have another option at the end of your Novated Lease period.

Option 3 - Upgrade the Vehicle

Under this option you can trade in your existing vehicle and upgrade to another vehicle. A new Novated Lease is then set up for this replacement vehicle.

Two points need to be made here in regards to the trade-in amount of your existing vehicle:

a. If the trade-in value is less than the residual value plus GST on your existing novated lease, then the short fall is still due and payable by you (the driver) to the financier.

b. If there is a surplus amount between the trade-in value and the residual amount plus GST, then this surplus is paid directly to you (the driver) and cannot be used to reduce the purchase price of the replacement vehicle.

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