Car lease vs buy calculator
Compare leasing and financing the same car side by side: monthly payments with tax, what you pay over the lease term, and the equity you keep if you buy.
Free · No sign-up · Updated October 2026
$4,598less to lease over 4 years, after the value you keep
Lease
$491.74/mo
$26,994 over 48 months; you return the car
Buy
$719.27/mo
$31,591 net over 48 months, after $5,934 in equity
- Lease: depreciation + rent charge
- $312.50 + $122.67
- Lease: tax on each payment
- $56.57
- Buy: tax paid up front
- $5,200
- Buy: amount financed
- $42,200
- Buy: loan left after 48 months
- $16,066
- Buy: car’s estimated value then
- $22,000
Estimates only: your quote, provincial tax rules and the car’s real resale value will differ. Next step: check a loan quote with the car loan calculator.
Over the 48-month lease term
| Item | Lease | Buy |
|---|---|---|
| Monthly payment, with tax | $491.74 | $719.27 |
| Down payment and trade-in | $3,390 | $3,000 |
| Payments made in the term | $23,604 | $34,525 |
| Excess km charge | $0 | $0 |
| Total paid | $26,994 | $37,525 |
| Equity you keep (value minus loan left) | $0 | $5,934 |
| Net cost | $26,994 | $31,591 |
Over the full 72-month loan you’d pay $9,587 in interest. Maintenance, insurance and wear charges at lease return aren’t included.
How this calculator works
Lease payment
We use the standard lease formula. The amount you lease is the price plus lease fees, minus your down payment and trade-in. Depreciation is that amount minus the residual value, spread over the term; the rent charge is the amount you lease plus the residual, times the money factor (lease rate ÷ 2,400).
Sales tax is added to each payment and to a cash down payment. Excess kilometre charges are your extra kilometres a year, times the years in the term, times the per-km charge.
Loan payment
For buying, sales tax is paid on the price up front and the price plus tax, minus your down payment and trade-in, is financed. The payment is a standard amortized loan payment at the annual rate ÷ 12.
We assume a trade-in lowers the amount that’s taxed, as it does for dealer sales in many provinces. Tax rates and rules vary by province: the Canada Revenue Agency publishes GST/HST rates (13% HST in Ontario, the default here), and provinces set PST and QST.
Comparing the two fairly
Both are compared over the lease term. For buying, we take everything you paid in that time and subtract your equity: the car’s estimated value then, minus what you still owe. We start that value at the lease residual, which is a lessor’s estimate, not a guarantee; change it if you expect more or less.
Insurance, maintenance, repairs and lease-end wear charges aren’t included. Results are estimates, so check them against a real quote.
Frequently Asked Questions
Is it better to lease or buy a car in Canada?
It depends on how long you keep the car and how much you drive. Leasing usually costs less over the first few years because you only pay for the expected depreciation, while buying costs more up front but leaves you with a car you own. If you keep a car well past the loan, buying usually works out cheaper over time.
What is the difference between leasing and financing a car?
With financing, you borrow the full price plus tax and own the car once the loan is paid. With a lease, you pay for the drop in value over the term plus a rent charge, then return the car or buy it for the residual value. Leases also come with kilometre limits and wear standards.
How is a car lease payment calculated?
The base payment is depreciation plus a rent charge. Depreciation is the amount you lease minus the residual value, divided by the months in the term; the rent charge is the amount you lease plus the residual, times the money factor. Sales tax is then added to each payment.
What does this calculator show for a $40,000 car?
With 13% tax, $3,000 down, a 48-month lease at 4.99% and a 55% residual, the lease is about $491.74 a month and $26,994 in total. A 72-month loan at 6.99% is about $719.27 a month; after 48 months you’d owe about $16,066 on a car worth an estimated $22,000, so the net cost of buying is about $31,591 over those four years.
What is a money factor on a car lease?
It’s the lease’s interest rate written as a small decimal. Multiply the money factor by 2,400 to get an approximate annual rate, so 0.00208 is about 4.99%. Ask the dealer for the rate or money factor so you can compare offers.
What is the residual value on a lease?
It’s the lessor’s estimate of what the car will be worth at the end of the lease, set as a percentage of the price. A higher residual means less depreciation to pay for, so lower payments. It’s also the price you’d usually pay to buy the car at lease end.
Do you pay sales tax on a car lease in Canada?
Yes. With a lease, sales tax is generally charged on each monthly payment, while a purchase is taxed on the price when you buy. Rates and rules vary by province, so confirm with the Canada Revenue Agency for GST/HST and your provincial finance ministry for PST or QST.
What happens if I drive more kilometres than my lease allows?
You pay an excess kilometre charge at lease end for every kilometre over the allowance. The calculator multiplies your extra kilometres a year by the term and the per-km charge from your contract. If you know you’ll drive more, a lease with a higher allowance is often cheaper than paying the overage.
Can I buy my car at the end of the lease?
Most leases let you buy the car for the residual value stated in the contract, plus tax and any fees. That can make sense if the car is worth more than the residual or you’ve driven well over the allowance.
Results are estimates for general information, not financial advice. Confirm rates, fees and terms with your card issuer or bank. See our methodology.