In the beginning of the two scenarios above, it seems as though Johnny Civilian has gotten a better deal, in that the interest rate given for the loan to purchase his vehicle is 8%, while 13% is charged on what Sally Businessperson borrows.

Of course, that is only the beginning of the tale.

By the end of the first month, however, the true story starts to emerge, as the monthly tax savings of $839.66 for Sally Businessperson starts to factor in the equation.

How does it factor you ask?

Well, this tax savings that she would've otherwise owed to the government, had the vehicle been purchased as a non business person, can now be used towards paying her loan of $2,275.31. This new found cash savings means she only has to come up with a further $1,435.65 to pay the said loan. And this fact alone makes $1,435.65 the effective monthly payment for the vehicle.

The icing on the cake of this story is fittingly at the end of it, when they both sell their vehicles for $40,000.

Once you factor that in, the effective total cost of the vehicle for Sally Businessperson is $46,138.83, and the NEW effective monthly cost, calculated retroactively, is $768.98.

I'm not an accountant nor an attorney, nor have I ever I played either on television.

This calculator is not 100% accurate in terms of how your accountant would apply the write-offs in your business, nor was it meant to be. It was created to give its users a conceptual understanding of how tax-write offs for vehicles, and tax write-offs in general, CAN work for us, small business people... and not just the big corporations.

So do not allow yourself to get bogged down by the minutiae of small details and lose the lesson. Rather, use it for the purpose it was intended. And that is to encourage YOU, small business person, to take advantage of the tax write-offs you're entitled to.