Estimate lease repayments with a residual value.
A lease or a loan with a residual has a lower regular payment because part of the value is deferred to a lump sum at the end. That final amount — the residual or balloon — is set at the start and falls due whether or not the asset is worth it by then. The regular payment and the residual have to be assessed together; looking at the payment alone understates the commitment.
For a business, the choice between a lease, a chattel mortgage and a hire purchase affects how the asset appears on the books and how GST and depreciation are treated. That is an accounting question as much as a finance one, and the right structure depends on your business circumstances. Speak to your accountant before choosing on repayment alone.
The options at the end are generally to pay the residual, refinance it, trade the asset in, or sell it and settle. Each is easier if it is planned two or three months out rather than in the final fortnight. Our guide on balloon payments walks through what each option involves.
A calculator gives you a starting figure. What a lender will actually approve depends on your income, expenses, credit history and the property, and it varies between lenders. We compare more than 40 lenders on our panel and will tell you where you genuinely stand — see our home loan, refinancing and car loan services, or the suburb pages for Werribee, Tarneit and Point Cook.
A lump sum left owing at the end of the term. Regular payments are lower during the term because part of the value is deferred to that final amount.
It depends on cash flow, how long you will keep the asset and your tax position. That is a question for your accountant alongside the finance comparison.
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