Leasing a vehicle can be a cost-effective way of financing your next car. This leasing calculator will show you the full costs involved.
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Leasing a vehicle may be a cost-effective option for you or your business, but it’s important to understand all of the potential charges involved. This vehicle lease calculator will show you your monthly repayments, as well as the total interest you’ll pay, to help you keep on top of your vehicle costs.
To use the leasing calculator (also called a salary sacrifice car calculator), enter in the purchase price of your car and the residual amount you’ve agreed that the car will be worth at the end of the lease. Next, enter the leasing term, the interest rate and by what method the payments are made (click on the green arrow to choose either in advance or in arrears).
Finally, click anywhere on the page to see your monthly repayment results, the total interest payable and the total payment amount. Use the salary sacrifice car calculator to play around with different numbers until you arrive at a monthly repayment and lease term that you’re comfortable with and use this information when you’re negotiating your salary sacrifice car lease with your employer.
Novated Leases
A novated car lease (also known as a car salary sacrifice) is a three-way arrangement between you, your employer and a lender. The lender buys and supplies the car you specify before your employer takes the car lease payments out of your pre-tax salary, which is where the term salary sacrifice comes from. You pay for your car in instalments over an agreed period and, at the end of that time, you can either pay the residual value (known as the balloon payment) to purchase the car outright, sell the car to cover the residual amount or upgrade to a new car and start another lease.
Finance Leases
Finance leases are flexible leases for businesses wanting to buy the vehicle at the end of the lease period. There is a set lease term on the chosen vehicle, with an option to purchase (with a residual payment) at the end of the lease period. Your company is responsible for paying for general car expenses such as vehicle rego, insurance and maintenance costs, but can claim GST, depreciation and the interest paid on their repayments, plus get an instant asset write-off at tax time if the vehicle is purchased.
Operating Lease
These types of leases suit businesses wanting a shorter-term vehicle lease for a set period of time, after which they hand back the vehicle. Their advantage is that companies can replace or update their vehicles or equipment more often. Vehicle maintenance and running costs are included in the lease repayments, and the lease can be cancelled at any time. Companies can claim the interest paid on their repayments as a business tax expense.
Some of the benefits of salary sacrifice car leasing include:
That will depend on your overall financial situation. A novated car lease will reduce your taxable income and save you from paying the cost of GST on your new car. Initially, repayments may be cheaper than if you have a car loan, but the lease may cost you more overall once you take the cost of the balloon payment into account. Repeatedly leasing cars will also likely work out to be more costly than buying one outright and keeping it for ten to 15 years
On the other hand, if you buy a car with a car loan, you’ll own the car from the moment you buy it and will have more choice about buying a second-hand car. You’ll also have more choice about negotiating the final balloon payment to adjust the loan cost to make it affordable to your budget, although balloons are generally only attached to commercial car loans. You can see how much a car loan will cost you using our car loan repayment calculator.
The novated car lease calculator will show you how much interest you’ll be paying over the term of your lease, and also the monthly repayments, so you can adjust these figures until you find a repayment schedule that fits in with your budget.
The higher the residual value of your car at the end of the lease period, the less your monthly repayments will be, so it may pay to choose a car with a higher residual value. These tend to be higher-end vehicles, with Tesla, Porsche and Land Rover leading the resale value stakes amongst luxury brands.
In terms of more affordable models, Toyota, Mazda, Ford and Holden are all popular options which retain their resale value wellthe higher the residual, the larger the lump sum you'll be liable to pay at the conclusion of the loan.
Towards the end of the year, many car dealers advertise end of year lease special deals to clear their stock of new and used cars in preparation for the following year’s new stock to arrive.
If you can time your car lease towards the end of the year, or the early new year, this can be a good time to grab a bargain and get a new car for a reduced price.
Car leases can involve used cars, so if you are looking to reduce your monthly lease payments consider leasing a car that is a year or two old. You will still have the advantage of driving a nearly new car, but the depreciation on the car won’t be so high, as a new car loses the most value in the first 12 months of ownership.
Use the salary sacrifice car lease calculator to work out how much you can save by opting to lease a used, as opposed to a new car.
You can reduce your lease payments by choosing a less expensive model of car. For instance, if you lease a Honda Civic with a value of $30,000 for three years at 5% p.a., with a residual value of 46.88% ($14,064), your estimated novated lease payment would be $536 per month
However, if you choose a Hyundai Tucson with a value of $48,000 for the same term and residual percentage ($22,502), your monthly payment will jump to $858.
Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.
We’re partnered with lenders, insurers and other financial institutions who compensate us for business initiated through our website. We earn a commission each time a customer chooses or buys a product advertised on our site, which you can find out more about here, as well as in our credit guide for asset finance. It’s also crucial to read the terms and conditions, Product Disclosure Statement (PDS) or credit guide of our partners before signing up for your chosen product. However, the compensation we receive doesn’t impact the content written and published on our website, as our writing team exercises full editorial independence.
For more information about us and how we conduct our business, you can read our privacy policy and terms of use.
© Copyright 2024 Quantum Savvy Pty Ltd T/as Savvy. All Rights Reserved.
© Copyright 2024 Quantum Savvy Pty Ltd T/as Savvy. All Rights Reserved.
Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.
We’re partnered with lenders, insurers and other financial institutions who compensate us for business initiated through our website. We earn a commission each time a customer chooses or buys a product advertised on our site, which you can find out more about here, as well as in our credit guide for asset finance. It’s also crucial to read the terms and conditions, Product Disclosure Statement (PDS) or credit guide of our partners before signing up for your chosen product. However, the compensation we receive doesn’t impact the content written and published on our website, as our writing team exercises full editorial independence.
For more information about us and how we conduct our business, you can read our privacy policy and terms of use.
