# Salary Packaging Calculator

See what your options are with our easy, interactive calculator.

## Information about our Novated Lease Calculator

When most people look at buying a car, one of the main decisions that need to be made is about affordability. What is this car going to cost me out of the pay I get in my hand. A good Novated Lease calculator will provide this information up front. Our simple to use Novated Lease calculator tells you in less than 30 seconds the exact cost to your take home pay for any vehicle value you enter.

But what does all this mean?

When looking at any Novated Lease calculator it is important to understand what is included and importantly what is not included. On a Novated Lease calculator the provider can change the way fuel, tyres and scheduled services are calculated which will reduce the amount allocated to the running costs to make their quotes look cheaper, but in the end you could be paying a lot more. It is very important to understand what is in each of the running cost budgets and how they are calculated. At the end of this explanation you will be able to do a quick check of your current budgets and see what’s right and what’s missing!

The Calculations

Fuel

Each car manufacture (Eg. Toyota) will publish an average fuel usage for each of their vehicles. This fuel usage is normally represented in litres per 100kms. For example an average small car usage is about 6 to 7 litres per 100kms and for a large 4×4 this can range between 12 to 16 litres per 100kms. In our Novated Lease calculator we use this measurement to calculate each fuel budget;

(Litres/100kms) X (Your annual kms travelled/100) X (Average fuel cost per litre) = Fuel budget.

(7.5) X (15,000/100) X \$2.25 = \$2,531.25 Annual Fuel Budget.

In our Novated Lease calculator we use \$2.25 for the fuel cost because we have clients in parts of Australia where fuel is consistently at this price level.

Tyres

In a Novated Lease calculator a tyre budget is a little harder to estimate simple because tyre prices can vary so much depending on the type of tyre the driver wants, for example a lower profile tyre maybe more expensive, but important to the vehicle driver. In our Novated Lease calculator we research an average cost for each of the vehicle categories we use. We simple apply this cost to an average tyre change time period and the budget is set.

(Average cost of a tyre X 4) = Cost of a set of tyres.

Your annual kms travelled X the lease term in years = Total KMs

Total KMs/35,000kms (average tyre change period) = Sets of tyres required.

Sets of tyres required X Cost of the set / years of lease = Total tyre budget per year.

Example – Mary drives 15,000kms per year and is about to start a 5 year lease. The cost of a set of her tyres is \$850.

15,000 X 5 = 75,000kms /35000 = 2.14 sets of tyres X \$850 per set = \$1,819/5 years = \$363.80 per year.

Maintenance (Servicing)

Most cars need a service every 10,000 to 15,000km and the cost of this service depends on the type of vehicle you choose. In our Novated Lease calculator we have set a preset budget estimate depending on the vehicle type (small hatch, large, 4×4…) you choose.

Example – Mary drives 15,000km a year in her Toyota Prado 4×4 Wagon.

\$450 Per service every 15,000kms = \$450 per year.

Registration and Insurance

For registration and insurance renewals we use an estimate again depending on the type of vehicle chosen.

Finance

The finance is on a standard novated lease calculation with a few small variations.

1. The lease is two months in arrears. This means that the payments for the first two months are \$0.00. These payments are spread over the balance of the lease term. For example if you are wanting to take a 5 year (60 month) lease then there will be 60 payments, however the 1st and 2nd month will be \$0.00 and then 58 payments of \$400 for example. This structure allows the Salary Packaging company such as Vehicle Solutions Australia to establish the service including the payroll deductions and collect several deductions prior to the first real payment is due.

2. The first years Comprehensive Car Insurance can be financed if required. This means that you never have to come up with the cash for your insurance. When the insurance fall due again in 12 months simple send in the renewal and the Salary Packaging provider can pay this out of the funds in your Novated Lease account.

Residual Value – There is always a lot of talk about the balloon payment that falls due at the end of your lease. This is call the residual value or the final value (for tax purposes). The ATO allow you to pay for your car through your employer. This arrangement saves you take and is very convenient to run. However for tax purposes only, because your employer is paying for the car from money deducted from your salary you can’t get any equity in this vehicle. That means it needs to be paid back to a realistic market value at the end of the lease.

GOOD NEWS – Because there is a residual value at the end, your repayments are cheaper during the lease term. Most people use these cheap finance payments to get into a more expensive car.

The residual value is a ATO set percentage based on the lease term, but has a buffer of approximately 5% either side of required rates.

Loan or Lease

For most people buying a car means they need some form of finance. One of the most common questions is wouldn’t I be better off putting the car on a normal car loan? To get a true comparison of the difference between a loan and a lease please contact our team.

Finance Approval Conditions

After you have finished used our Novated Lease Calculator and being happy that you can afford the deduction from your salary the next step is getting the finance or lease approved. In general getting a Novated lease approved is a little easier than normal finance. The reason for this is simply because the financier is getting the repayments directly from your employer before you even get taxed. This gives the financier more confidence that their loan is going to be repaid.

To get a pre-approval started, contact our team today. The pre-approved will provide you with an approval in principle on the vehicle you choose. This approval is not binding and we never put any pressure on you to use this approval. The approval will provide you with a better negotiating position in the vehicle purchase. People who are ready to buy and have the funds in place can request a cash price for immediate delivery.