The honest net cost of a novated lease against paying cash or a car loan, over the term, using real effective rates and real running costs. All three end with you owning the same car.
Sets your marginal tax rate (incl Medicare).
Fuel/charging, servicing, tyres, insurance, rego. Upload a quote and we use the real figures.
Best value
Novated lease
$47,115
over 5 years
Car loan
$81,982
+$34,867 more
Pay cash
$83,122
+$36,007 more
A novated lease comes out cheapest, by about $36,007 over 5 years.
Because the EV is FBT-exempt, the whole package comes out of your pre-tax salary, which is where most of the saving comes from.
Novated lease
Lease finance over term$54,510
Running costs (GST-free)$22,727
Residual at the end$16,878
Tax saving (pre-tax salary)-$30,123
Car value at the end-$16,878
Net cost$47,115
Car loan
Loan repayments over term$73,860
Running costs (inc GST)$25,000
Car value at the end-$16,878
Net cost$81,982
Pay cash
Purchase price$60,000
Running costs (inc GST)$25,000
Return you give up (5% on the cash)$15,000
Car value at the end-$16,878
Net cost$83,122
Novated lease vs your own cash
$36,007 cheaper with the lease
over 5 years, both ending with you owning the car
Cashflow advantage (lease)+$21,007
Offset / home-loan interest advantage (5% on the cash)+$15,000
Total difference (lease)+$36,007
Worked on a 9% effective (reducing-balance) rate, the real cost of the finance and the number most calculators leave out. Change it under “rate assumptions” to match your own quote. The interest advantage only applies if you really would keep that cash in an offset or invested; set it to 0 if you would spend it anyway.
Estimates only, not financial advice. All three paths end owning the same car, so each subtracts its value at the end of the term ($16,878 here). Novated lease uses a 9% effective rate; figures depend on your circumstances. For a precise number on a real deal, upload your quote or speak with a licensed adviser.
Reopens this comparison with your numbers.
Before you decide, a few things most tools skip
·If you left your job partway through, a novated lease doesn't just end. Around year 2.5 you'd still owe the outstanding finance, very roughly $37,814 here, before any early-termination or break fees, which vary a lot by provider. Always ask exactly what an early payout would cost before you sign.
·A novated lease can count as a reportable fringe benefit, which can affect your HECS/HELP repayments, childcare subsidy and other family assistance.
·It can also change your borrowing capacity for a home loan, some lenders treat the pre-tax deduction as reduced income.