Canada • vehicle decision model
Car Lease vs Buy Calculator (Canada)
Compare a lease and a financed purchase on the same timeline, including renewal cash, loan equity, remaining balance, Canadian sales tax and the resale assumption that can flip the decision.
See the Canadian lease-versus-buy formulas, rollover assumptions and official sources
Model sequence
Lease residual is based on vehicle price/MSRP, while the adjusted capitalized cost reflects the negotiated lease amount less the taxable cap reduction.
Lease payment before tax = (adjusted cap cost - residual) / term + (adjusted cap cost + residual) x money factor
Buy economic cost = cash down + payments made + remaining loan balance - estimated resale value
Model version: CLVB-CA-2.3. APR-to-money-factor uses the planning approximation APR / 2400; confirm the payment on the dealer worksheet.
Included
- Editable GST/HST/PST rate
- Lease cap reduction and its tax
- Lease and buy fees entered by the user
- Disposition cost at completed lease returns
- Positive or negative purchase equity
- Replacement-lease proxy beyond the first term
Excluded or limited
- Mileage and excess-wear charges
- Insurance, fuel, maintenance and repairs
- Trade-in tax treatment and rebates
- Early-termination liability
- Opportunity cost of cash
- Dealer-specific compounding and taxable-fee rules
Put the dealer offers on equal ground
Use the signed-quote numbers when possible. A lease residual and an expected resale value are not interchangeable, so the model keeps them separate.
Build the lease and finance paths
Enter pre-tax vehicle amounts unless a field says otherwise. Optional cash amounts can be zero.
Vehicle and comparison window
These inputs set the common timeline.
Lease contract
Copy these values from the lease worksheet.
Finance contract
Model the purchase loan and equity at the same horizon.
Watch the lower payment meet the ownership timeline
The two lanes use the same calculated cost object. The marker shows when the buy path first becomes cheaper, while the renewal gate shows where another lease begins.
A replacement lease may add new upfront cash.
The first month buying becomes cheaper.
Based on economic cost, not payment alone.
Where the lease money goes and where purchase equity appears
This forensic view separates payment optics, upfront cash, renewal cost, remaining debt and resale value before showing the final difference.
| Component | Amount | Decision note |
|---|
Does buying catch up, and can resale change the answer?
The first chart reveals timing. The second tests the fragile buy-side resale assumption instead of repeating the table.
When do the economic-cost lines cross?
Lease includes each replacement-cycle start. Buy cost includes the balance that must be cleared and the value recovered on sale.
How much does resale risk move the gap?
Compare the base buy-resale estimate with a five-point downside and upside case.
Keep the dealer-offer comparison
Export the latest calculation to a formatted Excel workbook with Summary, Inputs, Results, Breakdown, Chart Data and Assumptions sheets.
What a fair lease-versus-buy comparison must reconcile
A monthly-payment comparison misses the asset and debt left at the chosen horizon. This map shows what each result is designed to prove.
| Decision line | What enters the model | What it proves |
|---|---|---|
| Lease payment | Adjusted cap cost, contract residual, rate and tax | Cash-flow pressure during one lease cycle. |
| Lease horizon cost | Payments, cap reduction, fees, returns and replacement lease starts | Cost of continuous vehicle access through the selected month. |
| Buy payment | Taxed vehicle price, purchase fees, cash down, APR and term | Monthly loan obligation, not the final ownership cost. |
| Buy economic cost | Cash paid, remaining balance and estimated resale value | What ownership consumed after positive or negative equity is recognized. |
| Crossover month | Both cost paths measured month by month | Whether your expected ownership horizon is long enough for buying to catch up. |
Why the deposit is not a cost
A refundable lease security deposit affects cash due at signing, but it is not consumed if returned. The model reports the cash requirement separately and excludes the deposit from lease net cost.
Why resale is separate
The lease residual comes from the lessor. Buy-side resale is your market-value estimate at a different date and can be stress-tested independently.
Put both dealer quotes on the same timeline
Start with the period you are genuinely likely to drive the vehicle. If you choose a 60-month horizon and the lease ends after 36 months, the lease path needs another vehicle for the remaining 24 months. The model therefore carries forward the same lease structure as a transparent replacement-lease proxy. That is more honest than stopping lease cost at month 36 while the financed vehicle continues to provide transportation.
Copy the contract residual
Use the lender-set buyout percentage or convert the dollar buyout to a percentage of vehicle price.
Estimate resale conservatively
Run a lower buy-side resale case. A purchase that wins only under the optimistic estimate is fragile.
Check the exit date
If you may leave a lease before its term, this page is no longer the right model for that decision.
The payment gap is not the ownership gap
A lease often looks easier because it finances expected depreciation rather than the full vehicle. The financed purchase may carry a higher monthly payment, but part of that payment reduces a balance attached to an asset you can sell. The final verdict therefore credits positive equity and charges negative equity at the comparison horizon.
If cash flow is the binding constraint, the lower lease payment still matters. Treat that as a budget decision, not proof that leasing has the lower economic cost.
What happens after the first lease ends
The lease path applies another cap reduction and lease fee when a new cycle starts, plus a disposition fee when a cycle is completed. It assumes the replacement deal has the same price, rate and residual structure. That is a planning boundary, not a prediction of a future dealer offer.
Run at least two horizons. If leasing wins at 36 months but buying wins at 60, the real question is whether your switching habit is reliable enough to justify the short-horizon result.
Stress-test the number the dealer cannot guarantee
The contract residual is fixed by the lessor, but your future sale price is not. Condition, kilometres, accident history, market demand and the exact month of sale can all move the buy-side value. The sensitivity chart reruns the decision five percentage points below and above your estimate so a narrow result cannot masquerade as certainty.
For a deeper value curve, use the Car Depreciation Calculator Canada and bring the conservative resale percentage back here.
Costs this comparison intentionally leaves outside
Insurance, fuel, maintenance, winter tires, parking and repair risk are excluded because they depend on the vehicle and usage, not only the financing method. Lease-specific excess kilometres, wear charges and early termination also require contract terms that this model does not invent.
If those costs differ materially between your two real options, compare them separately before signing. The result here answers the financing-and-equity question, not the entire cost of driving.
Canadian lease-versus-buy questions that change the result
The residual or buyout is set by the lessor for the lease contract. Buy-side resale is an estimate of market value when you plan to sell the financed vehicle. They can differ, so combining them can distort the winner.
Yes. A cap reduction lowers the adjusted capitalized cost. This model reduces the lease balance by that amount, applies the entered tax rate to the cap reduction and still counts the cash paid at signing.
The remaining balance is added to cash already paid, then estimated resale value is subtracted. That credits positive equity and charges negative equity rather than pretending the outstanding loan disappears.
Do not shorten the horizon below the lease term. Early termination depends on remaining payments, buyout, vehicle value, fees and contract rules. Use the Lease Early Termination Calculator Canada for that decision.
No. You enter the combined rate that applies to the contract. CRA notes that the applicable GST/HST treatment depends on the place of supply and, for longer vehicle leases, the province of registration.