Leasing Calculator

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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, updated on July 3rd, 2024       

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Keep on top of your vehicle costs with Savvy’s leasing calculator

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.

Car leasing calculator explained

How do I use the novated car leasing calculator?

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.

What different types of vehicle leases are there?

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.

What are the benefits of novated car leasing?

Some of the benefits of salary sacrifice car leasing include:

  • you pay for your vehicle with pre-tax income, reducing your overall income tax bill. Use the novated car lease calculator to show you how much in income tax this will save you paying.
  • you save on paying GST on your new vehicle, resulting in an instant 10% price saving on the cost
  • you can benefit from fleet pricing for servicing and replacement parts, which all form part of the novated lease plan
  • at the end of the lease period, you can pay the residual amount and upgrade to a brand-new car with a new lease agreement

Is it better for an individual to lease a car or get a car loan?

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.

How can I reduce my monthly lease payments?

More frequently asked questions about vehicle leasing

What happens if I crash my leased car? Will I still have to pay for it?

If you have an accident and damage your leased car, your comprehensive car insurance will cover the cost of repair or replacement.  It’s important to contact your leasing company as soon as possible after the accident and they will arrange for towing and repair or replacement of your vehicle.  However, you will still have to pay the lease on your car while the repairs or replacement is being organised, even if no replacement is sourced.

Will my vehicle lease show up in my credit report?

Yes – all financial agreements you sign are visible on your credit report.  If you make all of your lease payments on time, this could have a positive effect on your credit score.

Can I buy equipment other than cars through a leasing agreement? 

Yes – there are many other types of machinery and equipment that are subject to leases, and they work in a similar way to a car lease.  This form of finance is a common way for small businesses to pay for the cost of expensive machinery required to run a business.  It is especially appropriate for small companies who don’t have sufficient cashflow to enable the outright cash purchase of expensive equipment.

Will leasing my car affect my ability to get a home loan?

The amount you pay for your leased car will be included in the monthly outgoings in your household budget, so it’ll reduce your disposable income as far as a lender is concerned.  However, if you’ve successfully leased a car previously, this could be a positive for your credit rating, as it proves that you can successfully fulfil repayment obligations.

Is insurance more expensive on a leased car?

Yes – insurance may be higher if you lease a vehicle.  On average, you could pay between 5% and 10% more for the same car insurance if your vehicle is leased.  You may not have a choice when it comes to insuring your leased vehicle, though, as some leasing companies will require you to use their insurance company, meaning you won’t be able to compare different policies to help you save.  It’s worth asking your leasing company about their insurance requirements and, if you do have a choice, comparing vehicle insurance to find the cheapest policy for your needs.

Do I need a high credit score to lease a car?

It will certainly help to have a higher credit score when you apply to lease a car, but stable employment may be the most important factor which determines if you are accepted for a car lease agreement.  If you change jobs during the lease term of your novated car lease, you will either have to ask your new employer to continue on the salary sacrifice agreement or pay out the lease to own your car if you can afford such a lump sum at the time.

What are the required minimum residual values for novated leases?

The ATO has set minimum requirements for residual values on car leases based on different term lengths, which are as follows:

  • 12-month term: 65.63%
  • 24-month term: 56.25%
  • 36-month term: 46.88%
  • 48-month term: 37.5%
  • 60-month term: 28.13%

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