Lease vs Buy Calculator Canada

A lease payment is lower than the finance payment on the same vehicle because a lease pays for the part of the car you use over the term, while a loan pays for all of it. Comparing the two payments is therefore misleading. This calculator measures the cash a purchase uses over the same period and subtracts what you still own at the end.

What the calculator compares

The lease side is the monthly payment times the term; nothing comes back. On the purchase side, the tool amortizes the price less your down payment into a monthly payment, totals the down payment and the payments made during the lease period, and values what you hold: resale value minus the loan balance still outstanding. Cash paid minus that equity is the net cost of buying, which lines up with the lease total.

A worked example

With the default inputs, a $30,000 vehicle with $3,000 down financed at 6.5% over 60 months costs about $528 a month. Against a $400 monthly lease over 36 months ($14,400), and a resale value of $18,000 after three years, the net cost of buying over the same 36 months is about $15,878, so leasing comes out about $1,478 cheaper.

At a 0% loan rate the picture changes. The payment is $450; over 36 months you pay $3,000 plus $16,200, $19,200 in cash, and $10,800 is still owing. With the car worth $18,000, equity is $7,200 and the net cost of buying is $12,000, against $14,400 for the lease. Buying matches leasing when equity reaches $19,200 − $14,400 = $4,800, which needs a resale value of $15,600. Above that, buying wins; below it, leasing does. Run the resale value across a range, since it is the input you know least about.

Why the payment comparison favours leasing

The gap between the two payments is roughly the gap between paying for depreciation and paying for the whole car. That difference builds up as equity, and unless you sell for less than you owe, you get it back. How much comes back depends mainly on how well the vehicle holds its value. Pickups and larger SUVs have generally held a higher share of their price in Canada than mid-size sedans. When a car loses value quickly, leasing passes that risk to someone else and can be a sensible choice.

Sales tax across the provinces

Sales tax is the largest cost the tool leaves out, and it falls differently on each side. Alberta and the territories charge 5% GST only; Saskatchewan comes to 11%, British Columbia and Manitoba to 12%, Ontario 13% HST, Nova Scotia 14%, and New Brunswick, Newfoundland and Labrador, and Prince Edward Island 15%. Quebec charges 5% GST plus 9.975% QST, 14.975% combined. Buy the car and the tax applies to the full price at delivery; lease it and the tax applies to each payment, spreading the cost. Registration and licensing are provincial too.

The federal luxury tax

Vehicles priced above $100,000 pay the federal luxury tax: the lesser of 10% of the full value and 20% of the amount above $100,000. It is applied before GST or HST, so sales tax is charged on a base that includes it. Near that price, leaving it out of both sides distorts the comparison.

Writing off a vehicle in Canada

For business use the deduction routes differ, and the calculator models neither. A purchased passenger vehicle goes into Class 10.1, where the capital cost you can claim is capped at a prescribed ceiling, with capital cost allowance at 30% a year on a declining balance and half that in the first year. A leased vehicle deducts the lease payments, prorated for business use and capped at a monthly limit set by the CRA. If you are reimbursed per kilometre at the CRA’s prescribed rate instead of claiming actual costs, the rate is the same for a leased or owned vehicle, so the financing decision is a personal one.

Where the Canadian climate shows up

Road salt shortens a vehicle’s cosmetic life, and a leased car is inspected against a wear standard at turn-in that a private buyer would simply negotiate over. Quebec requires winter tires for part of the year, so a second set of tires and rims is a real recurring cost outside both payments. Price both before you sign.

Assumptions and what is missing

This is a planning estimate covering financing only. It assumes your resale value is accurate at the end of the period, a fixed loan rate, and no early payoff or refinancing. It excludes sales taxes, the luxury tax, registration, insurance, maintenance, tires, lease acquisition and disposition fees, kilometre and wear charges, and the opportunity cost of the down payment. Resale value drives the answer most and is the least certain, so test a range and confirm every contract term with the dealer in writing.

About This Tool: Lease vs Buy Calculator Canada

Lease vs buy calculator canada: use this tool to get an instant estimate based on the figures you enter. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.