What will a car cost me from my current take home pay (after tax)?
A good Novated Lease calculator will provide this information up front. Vehicle Solutions Novated Lease calculator tells you in less than 30 seconds the exact cost to your take home pay for any vehicle value you enter.
We have now included Electric Vehicles (EV’s) to show how the new government tax incentive is life changing for all employees.
Looking to understand the potential savings and costs of a novated lease? Knowing your annual salary is crucial for accurate estimates. Our Novated Lease Calculator is designed to give you a precise estimate of your monthly payments, potential tax savings, and total expenses. It’s the perfect tool for assessing whether a novated lease is the right vehicle financing option.
Looking for more information?
Use our meeting calendar to book a phone call with one of our Leasing Specialists. Simply select a date and time that works for you, and we will do the rest!
But What Does All This Mean?
When looking at any Novated lease calculator in Australia, it is essential to understand what is included and what is not. On a Novated lease calculator, the provider can change how fuel, tyres and scheduled services are calculated, reducing the amount allocated to the running costs to make their quotes look cheaper. Still, in the end, you could be paying a lot more. It is essential to understand what is in each running cost budget and how they are calculated, including lease payments deducted directly from your salary. Additionally, lease payments are often taken from your pre-tax salary, reducing your taxable income and potentially lowering your overall tax burden. At the end of this explanation, you can check your current budgets and see what’s correct and missing!
The Novated Lease Running Costs Calculations
Fuel
Each car manufacturer (Eg. Toyota) will publish an average fuel usage for each vehicle. This fuel usage is generally represented in litres per 100kms. For example, an average small car usage is about 6 to 7 litres per 100kms, and for a large 4×4, this can range between 12 to 16 litres per 100kms. In our Novated lease calculator in Australia, we use this measurement to calculate each fuel budget;
(Litres/100kms) X (Your annual km travelled/100) X (Average fuel cost per litre) = Fuel budget.
- (7.5) X (15,000/100) X $2.25 = $2,531.25 Annual Fuel Budget.
Our Novated lease calculator in Australia uses $2.25 for the fuel cost because we have clients in parts of Australia where fuel is consistently at this price level.
Tyres
A tyre budget is a little more complex to estimate in a Novated lease calculator in Australia simply because tyre prices vary so much depending on the tyre the driver wants. For example, a lower-profile tyre may be more expensive but essential to the vehicle driver. In our Novated lease calculator, we research an average cost for each vehicle category we use. We simply apply this cost to an average tyre change time period, and the budget is set.
(Average cost of a tyre X 4) = Cost of a set of tyres.
Your annual km travelled X the lease term in years = Total KMs
Total KMs/35,000kms (average tyre change period) = Sets of tyres required.
Sets of tyres required X Cost of the set/years of lease = Total tyre budget per year.
Example: Mary drives 15,000 km per year and is about to start a 5-year lease. A set of her tyres costs $850.
15,000 X 5 = 75,000kms /35000 = 2.14 sets of tyres X $850 per set = $1,819/5 years = $363.80 per year.
Maintenance
Most cars need a service every 10,000 to 15,000km, and the cost of this service depends on the type of vehicle you choose. In our Novated lease calculator in Australia, we have set a preset budget estimate depending on your vehicle type (small hatch, large, 4×4…).
Example – Mary drives 15,000km a year in her Toyota Prado 4×4 Wagon.
$450 Per service every 15,000kms = $450 per year.
Registration and Insurance
We use an estimate again for registration and insurance renewals depending on the type of vehicle chosen.
Finance
The finance is on a standard novated lease calculation with minor variations. The fringe benefits tax impacts the overall cost by providing exemptions for non-luxury electric vehicles, making them more affordable. Additionally, the luxury car tax threshold determines eligibility for various tax benefits, affecting the pricing and accessibility of these vehicles.
- The lease is two months in arrears. This means that the payments for the first two months are $0.00. These payments are spread over the balance of the lease term. For example, if you want to take a 5-year (60-month) lease, there will be 60 payments. However, the 1st and 2nd months will be $0.00 and then 58 payments of $400, for example. This structure allows the Salary Packaging company, such as Vehicle Solutions in Australia, to establish the service, including the payroll deductions and collect several deductions before the first payment is due.
- The first year of comprehensive car insurance can be financed if required. This means you never have to come up with the cash for your insurance. When the insurance is due again in 12 months, simply send in the renewal, and the Salary Packaging provider can pay this out of the funds in your Novated Lease account.
- Novated leasing can lead to significant savings on a vehicle’s purchase price. You can also benefit from potential GST savings, making it a more cost-effective option than traditional car-buying methods.
Residual Value – There is always a lot of talk about the balloon payment that falls due at the end of your lease. This is called the residual value or the final value (for tax purposes). The ATO allows you to pay for your car through your employer. This arrangement saves you time and is very convenient to run. However, because your employer is paying for the vehicle from money deducted from your salary, you can’t get any equity in this vehicle for tax purposes only. That means it needs to be paid back to a realistic market value at the end of the lease.
GOOD NEWS – Because there is a residual value at the end, your repayments are cheaper during the lease term. Most people use these cheap finance payments to get into a more expensive car.
The residual value is an ATO-set percentage based on the lease term but has a buffer of approximately 5% on either side of the required rates. Please read a more detailed article and view the ATO-set percentages by clicking HERE.
Loan or Lease
For most people buying a car means they need some form of finance. One of the most common questions is wouldn’t I be better off putting the car on a normal car loan? To get an accurate comparison of the difference between a loan and a lease, please read our article by clicking HERE.
Finance Approval Conditions
After you have finished using our Novated lease calculator in Australia and are happy that you can afford the deduction from your salary, the next step is getting the finance or lease approved. Getting a Novated lease approved is a little easier than average finance. This is because the financier is getting the repayments directly from your employer before you even get taxed. This gives the financier more confidence that their loan will be repaid.
To get a pre-approval started, click HERE. The pre-approval will provide you with approval in principle for the vehicle you choose. This approval is not binding, and we have never put any pressure on you to use this approval. The approval will give you a better negotiating position in the vehicle purchase. People who are ready to buy and have the funds in place can request a cash price for immediate delivery.
We hope that you have found both our Novated Lease Calculator in Australia and information on each aspect of the calculator helpful.
However, if you have any questions regarding the numbers or want to discuss the process, please contact us during office hours at 1300 990 880 or click HERE to send us an enquiry form.