Holden pain won’t end for Queensland owners
HOLDEN drivers with leased vehicles may end up owing money to finance companies even after they sell their cars at the end of their contracts, an industry expert has warned.
Redbook.com.au general manager and research expert Ross Booth - whose business acts as a car price bible for the industry - says that historically, resale values drop sharply when a brand leaves Australia.
The value of brands like Opel, Saab and Hummer dropped when they exited Australia.
He warned that Holden's exit wasn't 'going to be good news' for many customers.
While customers who had novated leases through Holden had a guaranteed future value agreement written in to their contracts, Mr Booth warned customers who had more flexible schemes would not fare as well.
Some might find the residual value of their car post-Holden could be more than the vehicle is worth, and they could end up owing money to finance providers - even after they'd sold the car at the end of the lease.
Novated leasing specifies monthly payments over a specific period - often three or four years - with a pre-agreed amount (or residual value) to be paid to the finance company at the end of the lease.
Lease holders can opt to sell the vehicle, keeping the difference between the sale price and the residual amount owed to the finance company.
But if the residual value is more than the car is worth, the lease holder has to sell the car and still owes the finance company for the balance of the residual.
"Values are driven by demand', Mr Booth said.
"There isn't a strong demand when a brand is departing.'
However he said there may be some good news for owners of specific vehicles.
"Some limited-edition V8 Commodores will have strong sentimental appeal for enthusiasts.
"Looking at the current range of Holdens, there isn't too much you would put in the same category as a V8 Commodore', Mr Booth said.