But what does all this mean?
When looking at any Novated Lease calculator it is important to understand what is included and importantly what is not included. On a Novated Lease calculator the provider can change the way fuel, tyres and scheduled services are calculated which will reduce the amount allocated to the running costs to make their quotes look cheaper, but in the end you could be paying a lot more. It is very important to understand what is in each of the running cost budgets and how they are calculated. At the end of this explanation you will be able to do a quick check of your current budgets and see what’s right and what’s missing!
The Novated Lease Calculations
Each car manufacture (Eg. Toyota) will publish an average fuel usage for each of their vehicles. This fuel usage is normally 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 we use this measurement to calculate each fuel budget;
(Litres/100kms) X (Your annual kms 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.
In our Novated Lease calculator we use $2.25 for the fuel cost because we have clients in parts of Australia where fuel is consistently at this price level.
In a Novated Lease calculator a tyre budget is a little harder to estimate simple because tyre prices can vary so much depending on the type of tyre the driver wants, for example a lower profile tyre maybe more expensive, but important to the vehicle driver. In our Novated Lease calculator we research an average cost for each of the vehicle categories we use. We simple 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 kms 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 15,000kms per year and is about to start a 5 year lease. The cost of a set of her tyres is $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.
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 we have set a preset budget estimate depending on the vehicle type (small hatch, large, 4×4…) you choose.
Example – Mary drives 15,000km a year in her Toyota Prado 4×4 Wagon.
$450 Per service every 15,000kms = $450 per year.