Car Lease vs Buy (Australia 2026)
The Car Lease vs. Buy Calculator helps Australians determine whether it is financially better to finance a vehicle or use a novated lease based on tax brackets and usage.
How It Works
- Enter the vehicle price, your gross income, and expected annual running costs.
- Input the lease term and interest rates for both scenarios.
- The calculator computes your take-home pay under a novated lease (pre-tax deductions) versus buying the car post-tax.
Formula & Calculation Logic
Fringe Benefits Tax (FBT) is calculated using the Statutory Fraction method (usually 20% flat rate).
Worked Example
Car: 100,000. Leasing allows you to pay for the car and running costs with pre-tax dollars, reducing your taxable income to ~$85,000. Buying means paying the loan and running costs from your post-tax take-home pay, resulting in thousands less in your pocket over 3 years.
Result Interpretation
- Lease Wins: Typically for higher tax brackets where the income tax savings outweigh the lease management fees.
- Buy Wins: Typically for lower tax brackets or when buying a cheap, used vehicle in cash.
FAQs
What is a novated lease?
A three-way agreement between you, your employer, and a financier where the car payments come out of your pre-tax salary.
Does it apply to EVs?
Yes, in Australia, eligible EVs are exempt from FBT, making them highly attractive for novated leasing.
Sources & Last-Reviewed Date
- Sources: ATO Novated Lease Guidelines (2026).
- Last-Reviewed: 2026-09-03