Residual Value
Every car lease has to contain a residual, the residual is the lump sum owed to the financier at the end of a loan’s term and is expressed either as a dollar value or a percentage of the amount borrowed.
The residual value is tightly controlled by the ATO and must reflect what the vehicle value at the end of the finance term. Unlike and Hire purchase or a chattel mortgage it cannot just chosen to suit your payments or cash flow or simply be nil/nothing at the end.
To sum up a simple car lease is not as common as its name and is the least type of business car finance used with sole traders, partnerships or small business owners, unless you’re big business, publicly listed company or government entity you would most likely favour a fully maintain lease which we will go into detail in the next newsletter.
Our Memberships
