Use Savvy’s car lease calculator
Leasing a vehicle can be a cost-effective option for you or your business, but it’s important to understand all the potential charges involved. Our car lease calculator shows your monthly payments, as well as the total interest you’ll pay, to help you keep on top of your costs, whether you’re leasing a car or a piece of equipment.
How do I use Savvy’s car lease calculator?
To use the car lease calculator, enter the purchase price of your car or equipment and the residual value agreed between you and your leasing company. Next, enter the leasing term, the interest rate and how payments are made: either in advance (payment is made before the month of leasing) or in arrears (payment is made after the month of leasing).
Once you’ve filled all this out, you’ll be able to see how much your monthly payment, total interest payable and total overall cost are. You can use the calculator to play around with different numbers until you arrive at a monthly repayment and term that you’re comfortable with.
From there, you can use this information when you’re negotiating your agreement with your lease provider and/or employer to ensure it’s suitable for you or your business.
What leases can I use this calculator for?
Finance leases
Finance leases are flexible agreements available to businesses for a range of assets, from cars to specialist commercial vehicles like trucks, forklifts and excavators to equipment. As this is an agreement between your business and the lessor, you’ll make payments directly to them.
At the end of the lease, you’ll have the option to buy the car, sell it, trade it in or refinance the residual and extend your lease. You can also decide whether to include on-road costs like registration, insurance and servicing in your repayments (fully maintained) or keep them separate (non-maintained).
Operating lease
The key difference between operating leases and the rest is that you aren’t responsible for paying the residual, meaning you can simply hand your vehicle back at the end of your term. This makes them popular among businesses wanting to turn over their vehicles on a regular basis.
These leases are generally only available for road vehicles, rather than specialised commercial equipment. Like finance leases, you can decide between fully maintained and non-maintained agreements.
Novated leases
A novated lease is a three-way arrangement between you, your employer and your leasing company (lessor). The lessor buys your car and provides it to your employer, who then gives it to you. Your payments are deducted from your pre-tax salary and passed directly to the lessor, which is known as salary sacrificing.
The major benefit of novated leasing is that it reduces your taxable income, since some (or all) of your payments come from pre-tax salary rather than post-tax. The GST on the purchase of the car is also claimable by your lessor, who can pass the savings on to you. You can use the car however you like, for private or commercial purposes.
Novated leases attract fringe benefits tax (FBT), as the vehicle counts as a benefit from your employer. Most providers use the employee contribution method (ECM) to cover their FBT liability, paying part of your costs from post-tax salary.
Electric vehicles priced under the luxury car tax (LCT) threshold of $91,661 in 2026-27 are currently FBT-exempt, though this exemption is being phased down for leases entered into from April 2027 onward. Speak to your provider or an accountant about how FBT applies to you.
Note: this calculator doesn’t factor in any FBT or income tax savings you may benefit from.
What factors impact the cost of my lease?
There’s a range of variables that’ll impact your lease’s overall cost, including the following:
- The cost of the asset: a higher purchase price means a larger amount to repay, so your monthly payments and total interest will scale up accordingly.
- The leasing term: a longer term spreads your repayments out, lowering your monthly cost, but you’ll pay more in total interest over the life of the lease.
- Your lessor’s interest rate: even a small difference in rate compounds over the term, so it’s worth comparing offers from multiple lessors rather than accepting the first one.
- Your lessor’s fees: establishment and monthly account-keeping fees add to your overall cost, even though they sit outside the interest rate.
- The size of your residual: a larger residual reduces your monthly repayments but leaves a bigger lump sum owing at the end of your term, as well as increasing the interest you’ll pay overall.
Case study: how term length and residual size affect your costs
Stavros runs a landscaping business and is looking to take out a finance lease for a $45,000 ute. He’s deciding on which lease term to choose, with each option coming with a residual set at the ATO minimum. The following table shows how each choice affects his monthly cash flow and total cost:
| Purchase price | Lease term | Residual | Interest rate | Monthly payment | Total interest |
|---|---|---|---|---|---|
| $45,000 | One year | $29,534 | 8.50% p.a. | $1,558 | $3,232 |
| $45,000 | Two years | $25,313 | 8.50% p.a. | $1,074 | $6,093 |
| $45,000 | Three years | $21,096 | 8.50% p.a. | $904 | $8,641 |
| $45,000 | Four years | $16,875.00 | 8.50% p.a. | $813 | $10,888 |
| $45,000 | Five years | $12,659.00 | 8.50% p.a. | $753 | $12,851 |
| Calculations are for illustrative purposes only and don’t include any other fees associated with the leasing agreement. Interest rates may not be representative of the deal you receive on your lease. | |||||
Stavros weighs up the options to see which one strikes the right balance between monthly and overall costs. He decides that the three-year term is most suitable for him, as the $151 extra he pays each month compared to the five-year lease is easily absorbed and he saves over $4,000 on interest.
