In recent years, realistic simulation of vehicles on soft terrain has increasingly gained importance due to its use in operator training, mission planning and design. In this work we present a method which is tailored to the requirements of real-time simulation of soft soil in Virtual Reality applications. We combine models from terramechanics and soil mechanics in order to represent the interaction of vehicles and their digging tools with a deformable terrain, allowing us to simulate a broad range of vehicles, including earth moving equipment and planetary rovers on soft ground in real-time. We consider the impact of both wheel-ground and tool-ground interactions on the vehicle behavior by creating a fully coupled simulation of the dynamics of the vehicle and its environment. Furthermore we present verification experiments which show that our wheel-ground interaction method yields realistic results.