The lease vs buy car calculator compares the total cost of leasing a vehicle with buying the same vehicle on a loan, over the period you plan to drive it. Enter the price and financing details to see the monthly payments, total cost, equity and net cost of each option side by side. It’s part of our guide to buying a car in Canada.
How this calculator works
Enter the vehicle MSRP, your down payment, the term, the loan rate (for buying), the monthly lease payment and residual value (for leasing), your province for sales tax, and the resale value you expect at the end of the term. The calculator adds up each option’s payments, sales tax and interest, then subtracts what the car is worth to you at the end.
You pay for depreciation either way
When you lease, you pay for the car’s depreciation directly: the payment is built on the difference between the price and the residual value. When you buy, you pay for it indirectly, as the gap between what you paid and what the car sells for later. The comparison is really about which way of paying for that depreciation, plus interest and tax, costs less over the time you’ll drive the car.
Example: the same car leased or financed for four years
| Buy (48-month loan at 6.5%) | Lease (48 months) | |
|---|---|---|
| Vehicle price | $45,000 | $45,000 |
| Down payment | $5,000 | $2,000 |
| Monthly payment (before tax) | $948.60 | $499 |
| Total of monthly payments | $45,533 | $23,952 |
| Ontario HST (13%) | $5,850 on the price, up front | $3,374 on the payments and down payment |
| Total out of pocket | $56,383 | $29,326 |
| Car’s value after four years | $25,000 | $0 (returned) |
| Net cost over four years | $31,383 | $29,326 |
Over these four years, leasing costs $2,057 less than buying. If the buyer keeps the car four more years with no payments and it’s then worth $15,000, the buyer’s net cost over eight years is $41,383, while a second identical lease brings the leaseholder’s total to $58,652. Insurance, fuel and maintenance are left out of both.
The longer you keep a car after the loan is paid off, the more the comparison moves toward buying, because the leaseholder keeps making payments and the owner doesn’t. The trade-offs that don’t show up in a calculation (kilometre limits, warranty coverage, how often you want a new car, business use) are covered in the guide to leasing vs buying a car, which also sets out which kind of driver each option tends to suit.
The “invest the difference” argument
A lease payment is usually lower than a loan payment on the same car, and some people argue for leasing and investing the difference. The argument only works if the difference really is invested every month, and the gain to count is the investment’s growth, not the whole balance, since the contributions came out of the same budget the buyer spent on the car. The investment calculator shows what a monthly amount grows to at a given return; compare that growth with the net-cost gap from the calculator above.
Mileage penalties
Every lease sets an annual kilometre allowance, and a lower allowance usually means a lower payment. Kilometres driven beyond the allowance over the whole term are billed at the end, at a per-kilometre rate written into the contract that varies by manufacturer and vehicle. Some leases let you buy extra kilometres in advance, usually at a lower rate than the end-of-lease charge.
At a contract rate of $0.12 per kilometre:
| Excess km per year | Extra cost per year | Over a 4-year lease |
|---|---|---|
| 5,000 km | $600 | $2,400 |
| 10,000 km | $1,200 | $4,800 |
| 15,000 km | $1,800 | $7,200 |
Driving well beyond the allowance adds a cost a buyer doesn’t pay, though a buyer’s car also loses more resale value with high kilometres.
Lease-end options
At the end of the term the leasing company inspects the car and you choose what happens next:
| Option | What it involves |
|---|---|
| Return the car | You pay any excess-kilometre charges, charges for wear beyond what the lease calls normal, and the disposition fee if the contract has one, then walk away. |
| Buy it out at the residual value | You pay the residual price set in the lease, plus sales tax, and keep the car. This comes out ahead when the car’s market value is above the residual. |
| Lease a new vehicle | You return the car and start a new lease; some manufacturers waive the disposition fee or some wear charges when you lease again with them. |
| Question the return charges | A pre-return inspection shows what the lessor is likely to charge, and small repairs done beforehand can cost less than the lessor’s charge for the same damage. |
Ending a lease early is a separate case: the options are paying the early termination charges, transferring the lease to someone else if the contract allows it, or buying out the lease and selling the car, which only comes out ahead when the car sells for more than the buyout price.
Business use
If the car is used for business, the deduction for lease payments and for loan interest is capped and prorated by business use, and the rules differ between a leased and a purchased car. For passenger-vehicle leases entered into in 2026, the deductible lease cost is capped at $1,100 a month before tax. The full rules are in vehicle expenses for the self-employed.
Related calculators
- Car Loan Calculator: the payment and interest on a car loan
- Car Affordability Calculator: a price and payment that fits your income
- Budget Calculator: where a car payment fits in your monthly budget
- Sales Tax Calculator: GST, HST or PST on a vehicle purchase
- Savings Goal Calculator: saving for a down payment
- Investment Calculator: the “invest the difference” scenario
Sources
The figures and rules on this page come from these sources, last checked against them between September 4, 2026 and September 24, 2026. How we check facts.
- Canada Revenue Agency: GST/HST calculator (and rates)
- Department of Finance Canada: Government Announces the 2026 Automobile Deduction Limits and Expense Benefit Rates for…