Novated Lease Vs Loan Calculator

AssociatedLVolucite @ Volucite on 01/03/2026 - 18:59
Last edited 02/03/2026 - 15:50 by 1 other user

Hey all,

I built a very simple calculator to model.

Here’s the link if you’re curious:

https://app.volucite.com.au/app/253372859853875/260572847568…

It lets you input:

  • Vehicle price (incl GST)
  • Lease term
  • Interest rate
  • Gross salary
  • EV or non-EV
    Optional car loan comparison

And it outputs:

  • Estimated lease finance + running costs
  • Pre-tax deduction
  • Estimated PAYG tax impact
  • Net monthly cost
  • Weekly / fortnightly breakdown
  • Loan vs novated comparison
  • Potential savings over the term

It’s very much beta and based on simplified assumptions (running costs are averages, PAYG is estimated, etc). Not financial advice.

Would appreciate a sanity check from anyone who understands novated leases properly:

  • Do the results look broadly reasonable?
  • Am I missing any major components?
  • Is the EV treatment correct in principle?
  • Anything misleading in how it presents savings?

Thanks

Automotive Novated Lease

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  • changyang1230 on 01/03/2026 - 20:49

    Replicating my Reddit comment here in case this thread stays up.

    Thanks for giving this a crack. Novated leasing is one of those areas where clearer tools are badly needed, and I’m always glad to see more people trying to make the calculations accessible.

    For context, there are currently two reasonably comprehensive independent calculators (i.e. not run by leasing providers):

    Novated Lease Guide (mine): https://novatedlease.guide/calculator/
    Will Aitken’s LeaseCheck: https://leasecheck.au

    On the surface, novated lease modelling looks straightforward to anyone comfortable with finance maths. In practice, once you start building one properly, you quickly discover how many moving parts there are: FBT base value vs drive-away price, GST treatment, pre- vs post-tax components, residual value rules, RFBA/ATI impacts, 4.2c/km electricity claims, and most importantly how “savings” are defined. Tax saved is not the same thing as net saving.

    I had a quick look at your calculator using the same default inputs I use in mine. At the moment there are several foundational elements that would need tightening before I’d feel comfortable relying on the outputs:

    • EV FBT exemption is only valid for vehicles below LCT i.e. $91,387 currently. When I punched in $100,000 EV price, it did not flag the fact that this vehicle is not FBT-exempt.
    • There are no separation of FBT base value vs drive-away cost. You seemed to have treated the two as one and the same, however the two are needed for proper calculations as they BOTH feature in different parts of the calculation.
    • Because of that, your initial amount (which you called "finance base") and residual value are wrong.
    • You have defined your "amount financed" as "finance base" minus "residual value", this terminology and methodology is not how the industry applies it.
    • You further produced the monthly finance figure by a simple PMT of this erroneous "amount financed" and the interest rate, which is totally inconsistent with how the entire industry defines it.
    • In your calculator, a taxable income of $300,000 outputs $135,000 in PAYG tax which is a flat 45% x 300,000. I recommend you get familiar with the incremental income tax and the formulae. A quick cross-check with Moneysmart income tax calculator would highlight this discrepancy.
    • Your final savings figure is "tax saving" - a misleading figure as mentioned earlier.
    • This calculator is not practical if you start with an "interest rate" and proceed from there. Most people don't walk into novated lease with a known "interest rate"; they walk in with a quote e.g. $597 pre-tax per fortnight for the vehicle finance. If I get a quote for a car with a fortnightly payment of $597, there is no obvious way I could make use of this calculator. At the best of times, the relationship between a quote and its interest rate is inconsistent and fraught with issue.

    At this stage unfortunately there are still way too many fundamental issues with the calculator and I suggest not making it public until you improve these. Simulating finance is a dangerous game if you get the fundamentals wrong and produce a false figure. In an area where people are making some $50k to $100k commitments, accuracy absolutely matters.

    It took me about 2.5 years of iterating spreadsheets, reverse-engineering amortisation schedules, and verifying against countless quotes before I was comfortable publishing mine publicly. On the surface those maths looks simple enough; underneath it’s unfortunately anything but.

    If you’re keen to keep refining it, I’d strongly suggest:

    • Validating every tax output against ATO/Moneysmart tables
    • Replicating a real lease amortisation schedule (including deferment and payment-in-advance)
    • Separating vehicle dutiable value, drive-away, financed amount and residual cleanly
    • Redefining “saving” as net position vs cash/loan, not just tax reduction

    There’s definitely room for more transparent tools in this space; but the bar for financial modelling needs to be quite high before releasing something to the public.

    • 23
    • downhillmtbr on 01/03/2026 - 21:38

      Just want to say thanks for all your work mate! I hate to think of all the people who have gone into novated leases that haven't been aware of your calculator.

      A question, have you thought about if the government was to introduce changes to EV incentives, how would you ideally have them structured to avoid this burden on consumers?

      • 2
      • SetTheFaqUp on 02/03/2026 - 07:35

        "all the people who have gone into novated leases"

        Not knowing what they have signed up for. Didnt look much into the calculator, but including GST and on road cost in the purchase price is wrong to start with.

        GST are inputs and will be reapply at residual. Other onroad costs are deductible upfront.

        • 0
        • downhillmtbr on 02/03/2026 - 13:06

          I was referring to @changyang1230's work, not the calculator from the op

          • 2
          • SetTheFaqUp on 02/03/2026 - 14:51

            @downhillmtbr: I was referring to NL in general.

            Then made a reference to the calculator.

            • -1
      • changyang1230 on 02/03/2026 - 13:04

        Hey there. Sorry overlooked the comment earlier.

        Typically when the government changes their tax laws, pre-existing arrangements tend to be grandfathered. Therefore it's widely expected that even if the FBT-exemption is to discontinued, pre-existing FBT-exempt arrangements would just remain FBT-exempt till the end of the lease term.

        This information is to be considered in conjunction with other factors e.g.
        https://novatedlease.guide/risks/lease-length-and-risk/

        • 0
    • Hardlyworkin on 02/03/2026 - 20:08

      No all hero's wear vapes.

      • 1
    • shiver on 07/03/2026 - 19:21

      I really appreciate detail and nuance in this response. Ive been seeing much more advertising for NLs recently, and there seems to be a general additude that NLs are always a better deal than buying. As you point out, the costing can be actually quite complex to unpick, and I worry the dangers arent often discussed as part of a balanced conversation on the topic.

      Most people don't walk into novated lease with a known "interest rate"; they walk in with a quote e.g. $597 pre-tax per fortnight for the vehicle finance

      This summarises my biggest issue with the push for NL's at the moment. Tools like your calculator are very helpful for consumers who want to crunch the numbers, but there is a problem with the advertising and pricing of NLs deliberately trying to obscure what people are being charged for, and what components are actually required as part of the leasing agreement (e.g. often lessors are not required to purchase a specific insurance package and may choose their own cheaper). I think this, coupled with the current attitude that NLs are the thinking man's finance option, presents a risk that consumers wont properly scrutinise the deal they are signing up for.

      NLs additionally seem to be shifting some marketing towards buyers seeking a no money down option. This deal can appeal to buyers who have no savings to put down (no HISA or offset), and have no plan in place for managing a balloon payment. In these cases, an NL can be a disasterous financial decision. Typically lessees are not required to have as strong of a credit background to be rolled into an NL as a buyer via financing, so I worry NLs are being exploited as an avenue to sell vehicles to customers who cannot afford them, and do not appreciate the financial burden they are signing up for.

      • 1
      • changyang1230 on 08/03/2026 - 11:01

        Thanks for your thoughts.

        The entire NL industry thrives on their not being regulated tightly enough as they fall outside the scope of both Corporations Act 2001 (that requires PDS e.g. insurance products) as well as NCCP 2009 (that requires disclosure of standardised interest rates etc). This is why they get to go to town with all the obfuscation practice. For some reasons these typical consumer protection framework is just not applied to this effectively consumer-facing financial structure.

        I also agree that people who don't have the ability to pay out the residual is yet another potential target - in one of my latest exposition of the NL world, only 5 out of 20 "novated lease calculators" run by NL companies themselves even mention the existence of residual value in their quick quotes. This risks presenting a false juxtaposition against "car loan repayment + fuel" on a month-to-month cashflow consideration, while obscuring the fact that the equation on the NL pathway is predicated on your not owning the car at the end of the lease.

        • 2
      • changyang1230 on 01/03/2026 - 21:03

        With all due respect: do you actually know novated lease, especially the difference between FBT-applicable NL and FBT-exempt NL?

        • 0
          • changyang1230 on 01/03/2026 - 21:08

            @Wiadro: My comprehensive novated lease calculator literally presents the figure fully and transparently for you. (And judging from your not answering, I presume you haven't even come across FBT-exemption - I invite you to update your knowledge in this)

            This is the summary for the default figure which was my EV under NL.

            Over 5 years of ownership, the novated lease option costs $46,608 less compared to buying the car outright using offset cash.
            - Novated Lease (cashflow over 5 years): $50,525 in lease payments, $23,235 residual = $73,759 total.
            - Offset Cash (cashflow over 5 years): $81,423 driveaway, and $14,945 running costs = $96,367 total.
            - Electricity: novated lease's calculation assumes $630 per year (ATO claiming rule) but the actual expense is $371 per year. That difference accounts for an additional $1,294 gain in the NL pathway over the lease term.
            - Besides, your car ownership and running costs result in about $8,390 of additional home-loan interest under the novated lease, compared with about $31,096 if you buy using offset cash. (This saving is less visible but is reflected as a difference in your loan balance, hence is a genuine effect on your financial position.)
            - The $46,608 dollar saving consists of $23,901 dollars lower cashflow and $22,707 dollars less home-loan interest when you opt for the novated lease.
            ⚠️ Some effects are not accounted for (for example, changes in government subsidies), as these are too complex to fully calculate. Explore further in Details – Section 4: Adjusted Taxable Income.
            ⚠️ Novated leasing is a complex financial instrument with many caveats. Beyond the numerical outcomes shown here, it is important to consider the broader risks and trade-offs discussed here: Start with a holistic view rather than the savings figure.

            • 4
          • Iwantthebestprice on 01/03/2026 - 21:56

            @Wiadro: That’s because you don’t earn enough money. My partner and I are both in the highest tax bracket and we lease 2 EVs and are making great tax savings with the governments current FBT benefits.

            And if you can negotiate well, which I can, you can easily score a great interest rate, better then most banks will give, we locked in a rate less then 6%.

            If you know what your doing and earn enough money then this makes complete sense.

            • 1
            • Wiadro on 01/03/2026 - 22:02

              @Iwantthebestprice: i have a RAM TRX it doesnt make sense in anyway, on a novated lease it doesnt either

              • -6
  • freefall101 on 01/03/2026 - 19:52

    Lease payments look quite low, are you factoring in for the balloon payment still incurring interest over the life of the loan? It says "amount financed" on the last page like that is excluded.

    The savings tab is also really out of whack when compared to a loan, because it doesn't seem to take into account the balloon payment.

    • 1
  • thedeep on 02/03/2026 - 20:23

    I haven't read the comments above, so apologies if I am repeating what has been said before, but on a quick look I think you haven't factored in the correct pre-tax deduction which is materially impacting the overall comparison. For a novated lease all the vehicles costs including the lease payments are taken from pre-tax funds (but obviously not the post tax contribution). Also there are probably some technicalities to factor in, such as there is GST payable on the post tax contributions, but also the lease company can claim GST credit on the running costs.

    • 1
  • boomramada on 02/03/2026 - 08:33

    WTF is vehical type?

    • 0
    • tenpercent on 02/03/2026 - 12:19

      Submersible, terrestrial, aerial, spacefaring?

      • 1
  • jv on 02/03/2026 - 10:10

    Novated Lease Vs Loan Calculator

    I'd go for the Loan Calculator.

    • -1
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