Your car finance is ending. Maybe you've received a letter from your lender, or you've just noticed the date creeping up. Most Australians arrive at this moment without a clear plan — unsure of their options, uncertain about their equity position, and worried about making an expensive mistake. This guide explains exactly what your options are, how to calculate your position, and how to use the Veercal end-of-term calculator to find the right path forward for your situation.
Before you can evaluate any option, you need one number: your equity position. This is simply the difference between what your car is worth today and what you currently owe.
If equity is positive, you own more car than you owe — all options are open to you and most will end well. If equity is negative (you're "underwater"), your options narrow and you'll need to make up the shortfall one way or another.
| Equity position | What it means | Best options |
|---|---|---|
| Positive (car worth more than owed) | You have equity working for you. All options available. | Sell privately for maximum return; pay outright to avoid interest |
| Breakeven (roughly equal) | Most options available but the benefit from selling is modest. | Pay outright or refinance depending on your cash position |
| Negative (car worth less than owed) | You're underwater. Must cover the shortfall regardless of which option you choose. | Refinance full amount; lease hand-back if available |
Check Redbook, CarsGuide, and current private sale listings for your exact make, model, year, and kilometres. The figure a dealer quotes as a trade-in will typically be $2,000–$5,000 lower than private sale value — they need margin. Use private sale value as your baseline for comparison purposes.
The simplest outcome. You transfer the balloon or residual amount to your lender, they release the security interest, and you own the car outright. No more monthly payments, no ongoing finance obligation, no interest.
This option makes sense when: You have the cash available, you want to keep the car, and you'd prefer to avoid paying interest on a refinanced loan. If you're weighing up using savings vs investing those savings, compare your investment return rate to the refinancing interest rate — if investing returns more than the loan rate, there's an argument for refinancing and keeping the cash invested. But for most people, the simplicity of owning outright wins.
One thing to check: Your lender may apply an early payout fee or a payout adjustment — the "payout figure" can differ slightly from the balloon amount stated in your contract. Always request the exact payout figure before transferring funds.
Rather than paying the balloon or residual in a lump sum, you take a new personal loan for the owing amount and repay it over a new term — typically 1–5 years. This converts a large one-off payment into manageable monthly repayments.
This option makes sense when: You want to keep the car but don't have the lump sum available, or when keeping cash liquid is more important to you than avoiding interest. The interest cost is real — $2,500–$4,000 typically over a 3-year refinance — so it's worth comparing to the opportunity cost of using savings to pay outright.
Important: Don't automatically take the refinancing offer from your existing lender. Comparison rates can vary significantly between lenders. A broker can search multiple lenders simultaneously and often finds a materially better rate than your current provider's rollover offer.
If you're ready for a new car, you can trade your current vehicle through the dealer. The dealer pays out your existing loan directly and applies any equity as a deposit contribution on the new vehicle. If you have negative equity, that gap gets rolled into the new loan.
If you have negative equity and trade in, the dealer will add the shortfall to your new loan. This means you start your next finance agreement already owing more than the new car's value. Always know your equity position before walking into a dealership, and negotiate the trade-in value and new car price as completely separate transactions.
This option makes sense when: You have positive equity, you're ready for a new car, and you value the convenience of a single transaction over maximising the financial return. The trade-in will typically yield $2,000–$5,000 less than a private sale — that's the price of convenience.
Selling privately typically yields the highest financial return if you have positive equity — you keep the full market value rather than giving the dealer a margin. The process is more involved but straightforward if done in the right order.
Get your payout figure from the lender before listing the car. When a buyer is found, the process is: buyer pays you → you pay out the loan (the lender releases the security interest) → you transfer the registration. If the buyer's funds arrive before the lender's payout settles, you may need brief bridging finance — discuss this with your lender before you list.
This option makes sense when: You have positive equity and are willing to invest the time in the private sale process. The financial benefit over trading in — typically $2,000–$5,000 — is material enough to justify the extra effort for most people.
For finance leases and novated leases, returning the car to the provider at the end of the term is typically an option. You settle the gap (if residual exceeds market value) or walk away with equity intact (if market value exceeds residual).
Important: If market value exceeds the residual, handing back is rarely the right choice — you'd be giving the provider your equity. In a positive equity situation, selling privately or trading in and keeping the equity is almost always financially better.
Also check your lease agreement for fair wear-and-tear conditions. Excess damage, tyre condition, and service records are assessed at hand-back and can result in additional charges beyond the residual gap.
This option is not available for dealer finance or personal loans — the car is yours, not the lender's, and cannot be returned.
Novated leases have some specific features that make the end-of-term decision slightly different from other finance types.
The residual is set by the ATO. At the start of your novated lease, the ATO set a minimum residual based on your annual kilometres. For 15,000 km/yr over 3 years, this is 52.88% of the vehicle price. This residual is not negotiable — it's a statutory minimum.
The residual is not guaranteed to match market value. If you underestimated your annual kilometres, or if the car has depreciated faster than expected, the market value may be significantly below the residual. This is the most common source of unexpected costs at the end of a novated lease.
Your options are the same as any lease: pay the residual, refinance it, trade in and use equity, sell privately, or hand back. The tax treatment changes at end of term — running costs and lease payments are no longer salary sacrificed, so compare the after-tax cost of keeping the same car vs starting a new novated arrangement.
A new novated lease on the same or a different car is often the financially strongest option if you're still employed and eligible. You re-enter the pre-tax salary sacrifice benefit and reset your FBT obligations. Use the Veercal novated lease calculator to compare a new arrangement against the cost of owning the car outright post-lease.
Negative equity at end of term is more common than most people realise — particularly for vehicles with balloons set at 25–30% of original price that have depreciated faster than expected, or where market conditions have shifted.
The key principle: you cannot avoid the shortfall. Whichever option you choose, that gap will be settled one way or another. The question is how.
The single most expensive mistake at end of term is rolling negative equity into a new car loan without understanding it. Dealers are legally required to disclose this, but it's often buried in the paperwork. If a dealer says "we'll take care of everything" without discussing your payout and trade-in separately, ask specifically: "How much negative equity is being added to my new loan?" Get the figure in writing before you sign anything.
The Veercal end-of-term calculator is designed specifically for this moment. Here's how to get the most out of it.
Select your finance type from the dropdown — dealer finance, personal loan, finance lease, or novated lease. This affects which options are available (hand-back only appears for leases) and adjusts the labels to match your specific agreement.
Enter the amount owing — this is your balloon payment, residual value, or current loan balance. Do not guess at this figure. Call your lender or log into your account portal and get the exact payout amount. This number is the foundation of every calculation.
Enter the market value — your best estimate of what the car would sell for privately today. Check Redbook and current listings for your exact specification. If you want to be conservative, use the lower end of the range you find.
The calculator immediately shows your equity banner — green for positive equity, red for negative, amber for breakeven. This is the most important piece of information on the page. It determines which options are worth considering and which carry risk.
Each scenario card shows the key figure for that option — the cash needed today, the new monthly payment, the equity contribution, the net proceeds, or the gap to settle. Below each headline figure are the supporting numbers that let you evaluate the trade-offs.
The calculator highlights the best option based on your equity position — but this is a starting point, not a final answer. Your personal circumstances (cash availability, whether you need a new car, employment situation, investment plans) all affect which option is actually right for you.
Below the scenario cards, the decision guide presents a simple if/then framework based on your specific equity position. This is designed to cut through the complexity and give you a starting recommendation — along with the key warnings relevant to your situation.
Once you know your path, use the full Veercal calculator to model the next car if you're upgrading, or the refinancing scenario in detail if you're staying with the current vehicle. The full calculator includes the deep dive tab, exit simulator, and year-by-year breakdown.
Whatever option you're leaning toward, do these four things first.
1. Get your exact payout figure. Contact your lender — not your dealer — and ask for the payout figure as at today's date, and again as at your end-of-term date. These can differ. The payout figure is the legally binding amount that settles your obligation, and it may differ from the balloon or residual amount in your original contract due to interest accrual or early payout adjustments.
2. Get two or three market value estimates. A single Redbook valuation is a starting point, not a final answer. Check current listings for your exact make, model, year, colour, and kilometres. If you're trading in, get written trade-in offers from two or three dealers before accepting any of them.
3. Don't decide at the dealership. The end-of-term moment is when dealers have maximum leverage — you need transport, your finance is due, and they can package a new deal that buries the detail in complexity. Know your equity position and your payout figure before you walk in. Negotiate the trade-in value and new car price as completely separate transactions, days apart if possible.
4. If you're refinancing, shop around. Your existing lender will typically offer to roll your balloon into a new loan — this is the path of least resistance and often not the best rate. A mortgage broker comparison or direct applications to two or three lenders will almost always surface a better rate.
Enter what you owe and your car's current value. The Veercal end-of-term calculator shows all five options with your specific figures in under a minute.
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