Lease vs Buy Auto Calculator
Compare leasing versus financing a vehicle in Canada. Total cash out, equity, NPV at your discount rate, mileage overage, and a verdict on which option saves more.
How this comparison works
The calculator levels the playing field by comparing both options over the lease term. The lease side counts every monthly payment (with sales tax), the down payment (taxed), and any mileage overage fee. The buy side counts the down payment and every loan payment over the comparison period, then subtracts the vehicle resale value minus any remaining loan balance to get net cost. NPV at your chosen discount rate adjusts for the time value of money.
Inputs
If you lease
If you buy
Typical 36-month resale value: 50% to 60% of original price.
Lease summary
Buy summary
About leasing vs buying in Canada
Leasing versus buying a vehicle in Canada is fundamentally a total-cost and flexibility decision, not a monthly-payment decision. Leasing offers a lower payment because you pay only for depreciation (the gap between new price and residual value) plus a money factor that acts like an interest rate. Buying finances the full vehicle, so the payment is higher, but you build equity in an asset you can later resell.
When leasing wins
- You replace your vehicle every 3 or 4 years
- You drive less than your km allowance
- You want the latest tech and a full warranty at all times
- You use the vehicle for business (deductible up to the CRA cap of about $950/month in 2026)
When buying wins
- You keep vehicles 7 years or more
- You drive heavily (over 24,000 km/yr)
- You can pay cash or finance at a low rate
- You want to modify or customize the vehicle
Typical Canadian residuals at 36 months
Residual values at 36 months vary by brand and segment, but a typical range is 45% to 60% of MSRP. Strong-residual brands (Toyota, Honda, Subaru, some Lexus models) often hit 55 to 60%, while luxury brands and full-size SUVs can fall below 45%. The higher the residual, the lower the lease payment.
Mileage overage sensitivity
Overage fees of $0.15 to $0.25 per excess kilometre can shift the balance fast. On a 36-month lease at 20,000 km/yr, exceeding by 10,000 km costs about $1,500 to $2,500. If you drive more than 25,000 km/yr, buying almost always wins.
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Frequently Asked Questions
Last updated: July 2026
Leasing tends to win for buyers who replace their vehicle every 3 to 4 years, drive less than 20,000 km/yr, want the lowest possible monthly payment, and don't want to deal with reselling the car. Leasing also wins for business owners who can deduct lease payments up to the 2026 CRA limit of approximately $950/month plus tax (compared to limited capital cost allowance and interest deductions on a financed vehicle). If you finance, switch every 3 years, and try to resell the partially financed car, you typically lose 10 to 15% to depreciation plus selling costs.
Buying wins when you keep vehicles 6+ years, drive over 24,000 km/yr (lease overage would eat the savings), can pay cash or qualify for a low-rate auto loan, want to modify the vehicle, or want flexibility to sell at any time. A vehicle bought and kept for 10 years often costs half as much per year as leasing the same vehicle on rolling 36-month leases over the same period, because you stop paying once the loan is repaid while a lease never stops. The catch: you absorb depreciation, repairs out of warranty, and resale risk.
Reviewed by Alexandre Bernier, CFP®, CIM®
Educational tool - estimates only. Not individualized financial, investment, tax, or legal advice. Using it does not create an advisor-client relationship. Rules and figures change; verify against current CRA sources and consult a qualified professional. Editorial policy →