When selecting a vehicle for car finance it’s worth considering the residual amount at the end of your lease. This can be a major factor in what vehicle you feel comfortable in selecting, making sure you can keep up with the weekly payments but also if you think you can afford the residual value.
A residual amount is a sum owed to the lender at the end of a lease term after all other payments have been made. This allows you to pay off the reminding value of the vehicle so you can own the car outright. This payment is usually any additional weeks left on your lease, any repairs, roadworthy certificate and any outstanding arrears.
There’s a small difference in a balloon and residual payment. In regards to car finance, residual payments are a factor of the final estimated value of your vehicle accounting for depreciation considerations. Balloon payments related to car loans (not leases) where they are set as percentages or values not based on the value of the car.
If you have been given the option of purchasing the vehicle at the end of your lease, congratulations! We will be in contact to give you more information about your purchasing options and will also give you some clarification over how much to pay for the residual value.
By talking to one of our finance specialists they’ll be able to look into your unique situation, assess the circumstances and find you a vehicle right for you. Even if you have a bad credit score, we will work with you to ensure you can get into a safe, reliable vehicle at a cost that’s affordable for you.
For help choosing the right vehicle for car finance or to chat to one of our team please give us a call at 1300 257 426 or jump online today.