The RACT (Royal Automobile Club of Tasmania) recently released their annual report on which car is the cheapest to own. The overall winner was the Suzuki Alto, which was not surprising considering the size of the car.
“In six cases, petrol is cheaper to own, while six of the diesels cost less. In some instances, the difference is $80+ a week; in one, it’s just 10c. Generally, petrol suits passenger sedans but diesel works for a large SUV.” Said an RACV spokesperson
The real question that comes from the report is: If you are getting the most efficient car on the market, why not get the most efficient car that saves you on tax as well?
We decided that we would take the figures in the RACT report and see if we could save you money on the ‘cheapest to run vehicle’ in each vehicle class. We used a novated lease as our car financing option, as it would give you the best savings at the end of the day. If you would like to learn more about what a novated lease is watch the video below.
For all our calculations we will be using Bob, he is an average man earning $55,000 a year. Some of his car considerations in this article may be a bit iffy for some people; but he likes all cars no matter what the size and just wants to see his savings.
Bob is looking at the cheapest car to run the Suzuki Alto with an annual total cost of $5,545.56, which he is getting very limited tax savings off. Under a novated lease, he would get an increase of $1,852 in take home pay every year, for driving exactly the same car. This is done by taking out all the running costs from his pre-tax salary and then being taxed on his salary minus the running costs.
In the Light vehicle category the Suzuki Swift was the cheapest was a Suzuki Swift, with an annual cost of $6,120. Under a Car Finance Shop novated lease Bob would save $2,034.75 a year.
In the Small Vehicle class, the Holden Cruze was the front runner with an annual cost of $7,808.28. Under a novated lease Bob would save $2,433.19.
In the Medium Vehicle class the Volkswagen Jetta topped the lot with an annual cost of $9,311.45. It was cheaper than Australia’s most popular car for May 2014 the Toyota Corolla. Under a novated lease the Volkswagen Jetta would pocket Bob an extra $2,998.61.
In the Large Vehicles class the Holden Commodore Evoke VF was the best bang for Bob’s buck with an annual cost of $11,848.01. While under a Novated lease Bob could be saving $3,115.73.
In the Medium SUV class, if Bob purchased a Mitsubishi Outlander he would have running costs of $10,262.42. Bob decided to go with a novated lease with the Car Finance Shop so he got to take home an extra $3,855.45 a year.
The average savings from these six models using a novated lease was $2,887.55. Bob could go overseas every year from the savings he got with a novated lease, every single year of owning his car. Bob is quite the happy chappy and you could be too.
If you would like more information please do not hesitate to call us on 1300 309 343.
All figures used for calculation purposes in this article are based off the RACT figures in the 2014 Vehicle Operating Costs report: using 12,000 km/year as the basis for calculation, car price and residual as given, over a 5 year Novated Lease. The only estimate in the calculation was the income which we set at a standard annual income of $55,000.