Estimate your monthly car lease payment, including depreciation, finance charge, and GST.
Rates as of Q2 2025 (example)
This calculator estimates your monthly payment on a car lease, based on the vehicle price, your initial payment, the residual value at lease end, the lease term, the finance rate, and GST. It breaks your monthly payment into its three components — depreciation, finance charge, and tax — so you can see exactly what drives the cost and compare different lease offers.
A lease payment has three components: a depreciation component (covering the vehicle's loss in value during the lease), a finance charge component (the cost of financing both the depreciated value and the residual), and GST on the lease payment. The finance rate is converted to a "money factor" — a standard leasing convention — by dividing the annual rate by 24.
Formula: Adjusted Cap Cost = Vehicle Price − Initial Payment. Residual Value = Vehicle Price × Residual %. Money Factor = Finance Rate ÷ 24. Monthly Depreciation = (Adjusted Cap Cost − Residual Value) ÷ Term. Monthly Finance Charge = (Adjusted Cap Cost + Residual Value) × Money Factor. Base Monthly = Monthly Depreciation + Monthly Finance Charge. Monthly GST = Base Monthly × 10%. Total Monthly = Base Monthly + Monthly GST.
Example: A A$38,000 vehicle with a A$3,000 initial payment, 55% residual value (A$20,900), a 36-month term, and a 6% finance rate (example rate — enter your offered rate): Adjusted cap cost is A$35,000. Monthly depreciation is A$391.67, monthly finance charge is A$139.75, and monthly GST is A$53.14, giving a total monthly payment of about A$584.56. The total cost of the lease (all monthly payments plus the initial payment) is about A$24,044.10. (Note: this example is for illustration purposes only.)
Car leasing in Australia is most common in a business or commercial context — private individuals leasing a vehicle is less prevalent here than in the United States, though it does exist through some dealer finance products. The most common form of vehicle leasing in Australia for employees is a novated lease: a three-way arrangement between you, your employer, and a leasing company, where your employer deducts lease payments from your pre-tax salary on your behalf. A novated lease can reduce your taxable income and, when structured correctly under the ATO's fringe benefits tax (FBT) rules (including the FBT exemption for battery electric and plug-in hybrid vehicles introduced in 2022), can be a tax-effective way to finance a vehicle. This calculator models a standard operating lease structure (covering depreciation and finance costs) and does not model novated lease tax benefits — for a novated lease, ask your novated lease provider for a fully worked quote, as the pre-tax benefit depends on your income and the FBT rules for the specific vehicle. The residual value percentage is typically set by the lessor and varies by vehicle make, model, age, and term — a higher residual means your depreciation component is lower (lower monthly payment) but you pay more to buy the vehicle at lease end if you exercise the purchase option.
The residual value (also called the balloon or guaranteed future value) is the estimated worth of the vehicle at the end of the lease term, expressed as a percentage of the original vehicle price. It is typically set by the lessor (the finance company or dealer) based on the vehicle's make, model, expected depreciation, and the lease term. A higher residual percentage means less depreciation for you to fund during the lease (lower payments), but the vehicle will cost more to buy at lease end.
The money factor is the leasing equivalent of an interest rate, used to calculate the finance charge component of a lease payment. It is derived by dividing the annual finance rate by 24 (a lease convention). For example, a 6% annual rate gives a money factor of 0.0025. The finance charge is then calculated as (Adjusted Cap Cost + Residual Value) × Money Factor, which reflects the cost of financing both the portion being depreciated and the residual value throughout the lease.
Yes — GST at 10% applies to car lease payments in Australia. This calculator adds 10% GST to the base monthly lease payment (depreciation + finance charge). For businesses that are registered for GST, the GST component of lease payments is generally claimable as an input tax credit, effectively reducing the net cost. For individuals leasing through a novated lease arrangement, the GST treatment depends on the structure and your employer's GST registration.
A novated lease is a three-way agreement between you, your employer, and a leasing company, where your employer makes lease payments on your behalf from your pre-tax salary. This reduces your taxable income, which can be valuable depending on your tax bracket. From 1 July 2022, battery electric vehicles and some plug-in hybrid vehicles are exempt from fringe benefits tax (FBT) under a novated lease, making them significantly more attractive to salary-package. Whether a novated lease is worthwhile depends on your income, the vehicle, and FBT considerations — compare a full novated lease quote with the cost of a standard car loan or lease.
At the end of a lease, you typically have three options: return the vehicle and walk away (with no further obligation, assuming you've kept within the agreed kilometres and condition standards), purchase the vehicle at the residual value set at lease start, or sometimes trade the vehicle in on a new lease. If the vehicle's market value at lease end is lower than the residual value, returning it is usually the better financial decision; if market value exceeds the residual, purchasing it can represent good value.
A car loan finances the full purchase price of the vehicle (minus any deposit), and you own the car outright once the loan is repaid. A lease finances only the depreciation during the lease term, giving lower monthly payments but no ownership at the end. Leasing suits those who prefer lower payments and regularly want a new car; buying suits those who want to build equity in the vehicle and keep it long-term. The total cost of leasing over several consecutive lease cycles often exceeds the total cost of buying and holding the same vehicle.
Disclaimer: The information, rates, and figures provided on this page are for educational and illustrative purposes only and do not constitute financial advice. The finance rate, residual value, and GST used are examples only — actual lease payment components, residual values, and finance rates are set by the lessor and vary by vehicle, term, and individual creditworthiness. This calculator does not model novated lease tax benefits, FBT implications, or business GST input tax credits. Consult a qualified financial adviser or novated lease provider for advice specific to your circumstances.