When a novated lease stops beating a car loan
Every lease comparison asks whether a quote is good. This one asks how bad it would have to get — solved from the tax rules rather than estimated, and different for an electric car than a petrol one.
A novated lease wins on tax and loses on interest. Every comparison on this site asks whether a particular quote comes out ahead — but the more useful question sits behind it: how bad would the finance rate have to be before you would be better off at a bank?
Nobody publishes that number. Working it out means modelling the whole tax position rather than applying a headline rate, and the people who could do it sell leases. So here it is, solved from the rules in force today, on a $55,000 electric car over five years, on a $110,000 salary, with running costs packaged — the same defaults the calculator opens with.
Electric car · FBT exempt
27.9%
Above this finance rate, a car loan costs you less.
Petrol car · pays FBT
17.1%
Above this finance rate, a car loan costs you less.
The exemption buys room, not immunity
An eligible electric car pays no fringe benefits tax, so there is no post-tax contribution eating into the saving. That is worth a great deal — but it is worth a great deal of tolerance for a bad rate, not a free pass. The petrol car runs out of road 10.8 percentage points earlier, because every dollar of its FBT is cancelled with salary that has already been taxed.
Read it the other way round and it is a warning. A provider quoting an electric car at a rate a bank would not touch can still show you a saving — the exemption is carrying it, not the deal.
What it looks like
The lease's advantage over a car loan across the term, by finance rate. Positive means the lease is ahead.
| Finance rate | Electric (exempt) | Petrol |
|---|---|---|
| 5% | +$28,776 | +$14,607 |
| 10% | +$22,902 | +$8,732 |
| 15% | +$16,782 | +$2,613 |
| 20% | +$10,427 | −$3,742 |
| 25% | +$3,847 | −$10,323 |
| 30% | −$2,946 | −$17,115 |
The loan is costed at 7.5% — a comparable secured car loan, the same benchmark a quote's finance rate is judged against on this site. All three ways of paying leave you owning the same car with the same residual settled, so only the funding differs.
The rate that matters is not the one you think
Almost everyone packaging a car uses the employee contribution method: you pay part of the package from salary that has already been taxed, in an amount that reduces the FBT bill to nil. Because it reaches nil, the 47% FBT rate never enters the arithmetic at all. What the car actually costs you is the statutory percentage — 20% of its price, every year, in post-tax dollars.
That is why a rise in the headline FBT rate would not move either number above, and a change to the statutory percentage would move both. It is also why an expensive car hurts more than an expensive rate: the contribution is charged on the price, not on the borrowing.
Where does your quote sit?
A quote almost never prints its interest rate. Paste in the monthly figure, the amount financed, the term and the residual, and we'll recover it — then you can put it against the numbers above.
Every figure on this page is computed when the page is requested, from the same reference data the calculator uses, and changes with it. It is general information rather than financial or tax advice, and it describes one worked example — your salary, car and term will move all of it.