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Lease vs Buy Calculator

Compare leasing a car with financing it in Canada: what each really costs over the length of the lease, with GST, HST or PST, fees, and what the car is still worth at the end.

$

The negotiated price

Lease

$

Before tax

$

Down payment and fees, not the payment

$

Disposition fee, if any

Buy with a loan

$
%

A year

More options· 5-year loan, worth 45% after 48 months
%

As a share of the price: check what similar used cars sell for

Leasing costs less over 48 months

$1,216

Leasing costs $32,874. Buying costs $34,090 once you count the car’s value, less the loan you’d still owe.

Lease payment with tax
$633
Loan payment
$807
Your equity then
$8,650

What this means

Leasing pays for the part of the car’s value you use up, plus interest, so the monthly payment is lower. Buying costs more each month, but at the end of the lease term you own part of a car worth $18,000, with $9,350 still to pay on the loan.

Buying usually wins the longer you keep the car: once the loan is paid off, you drive for just the running costs. Leasing can suit you if you want a new car every few years, drive less than the lease’s yearly kilometres limit, and would rather not deal with selling.

Next step

Over 48 months

Lease: due at signing$2,500
Lease: 48 payments with tax$30,374
Leasing costs$32,874
Buy: down payment and loan payments$42,740
Less what the car is worth-$18,000
Plus the loan still owed$9,350
Buying costs$34,090

What each really costs

Over 48 months
$34,090$17,045$0
LeaseBuy
Cost
Assumptions in this estimate
  • Both are compared over the 48 months of the lease. Buying counts what you’ve paid, less what you’d get if you sold the car then and cleared the loan.
  • GST, HST or PST is charged on each lease payment and on the price when you buy, at the standard rates. BC charges more PST on vehicles over $55,000.
  • Lease mileage limits are usually set per year; going over costs extra for each kilometre, and wear beyond the normal can add charges when you hand the car back. Neither is included.
  • Insurance, fuel and maintenance are left out, as they’re much the same either way, although a lease may need higher insurance cover. Interest you could earn on the down payment isn’t counted.
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How the calculator works

  1. Leasing costs: the amount due when you sign, every monthly payment with tax, and any fee for returning the car.
  2. Financing costs: your down payment and the loan payments over the same months, less what you’d have if you sold the car then and paid off the rest of the loan.
  3. The difference: what one costs more than the other over the length of the lease.

Example

In Ontario, a $40,000 car leased for 48 months at $560 a month plus 13% HST, with $2,500 due at signing, costs $32,874. Financing it with $4,000 down and a 5-year loan at 6.55% costs $42,740 over the same 4 years. With the car then worth 45% of its price ($18,000) and $9,350 left on the loan, financing really costs $34,090, so leasing costs $1,216 less over the 4 years.

Keep the car for one more year, though, and the loan is paid off: from then on, financing gets cheaper every month.

Before you sign

  • Negotiate the price first: a lease payment is worked out from the car’s price, so a lower price lowers the payment.
  • Compare the rates: dealers often offer low lease and finance rates on new cars; check both.
  • Count the kilometres: pick a limit that matches how far you really drive.

Learn more

See our car loan calculator, the car affordability calculator, and the budget calculator.

Last updated

Frequently asked questions

Is it better to lease or finance a car in Canada?

Over the length of a lease, the two often cost about the same. Financing comes out ahead the longer you keep the car, because once the loan is paid off you drive for just the running costs. Leasing can suit you if you want a new car every few years and drive less than the kilometre limit.

Is HST charged on a car lease?

Yes. GST and HST, and PST where it applies, are charged on each lease payment, rather than on the whole price as when you buy. That spreads the tax out, and you only pay tax on the part of the car you use.

What happens if I drive more than the lease allows?

You pay a charge for each kilometre over the limit in your lease when you hand the car back. If you drive a lot, financing is usually cheaper.

Can I buy the car at the end of the lease?

Usually, yes, for the residual value set in your lease. If the car is worth more than that, buying it can make sense.