EV Novated Lease vs Cash vs Car Finance
If you’re new to novated leasing, understanding the financial details can be challenging, especially with the added complexities of running costs, GST, and tax savings compared to a standard finance agreement. However, with the current FBT exemption for eligible electric vehicles, the potential savings are significant. Below, we provide a straightforward comparison of a typical novated lease versus purchasing a vehicle with cash or using other financing options.
Car: Tesla Model Y RWD
Term: 5 Year Lease @ 15,000km Per Year
Base Salary: $90,000 a Year
Novated Lease Weekly Out Of Pocket Expense: $217
Annual Out Of Pocket: $11,317 (including all running costs)
Residual Payment: $16,817
For a clearer comparison with cash or traditional finance options, we'll exclude the budgeted running costs from these amounts, leaving us with the remaining figure, which we’ll refer to as the car payment.
Budgeted Runnings Costs
Fuel / Charging
Service & Maintenance
Tyres
Registration & CTP
Insurance
Total Budgeted Running Costs
$693
$132
$250
$672
$2416
$4165
Amount Left After running Costs Have Been Removed
Annual out of pocket: $11,317
Minus: Total budgeted running costs: $4165
Car payment = $7152
Cost Of The Vehicle In Full Including The Residual Payment
Car payment over the term: $7,152 x 5 Years = $35,760
Include the residual: $35,760 + $16,817 = $52,577
Summary
The Tesla model Y was $59,614 drive away to pay cash, due to the EV exemption our out of pocket is only $52,577 and we also own the vehicle at the end of the lease.
This does also not take into consideration the considerable opportunity of cost paying upfront $59,614 when this could be invested or reducing mortgage payments.
A novated lease is not only the most cost effective way to own the vehicle but from a connivence point of view, relaxing knowing that all your vehicle expenses are covered under one regular payment.