Car Loan vs Lease Calculator

The loan side

Sales tax is charged on the full price when you buy: tax = price × rate. The amount financed is price + tax − down payment, and the monthly payment is the standard amortization P × r ÷ (1 − (1+r)^−n) with r = APR ÷ 1200 and n = term in months. Car loans compound monthly (unlike Canadian mortgages), so no semi-annual adjustment applies.

The lease side (money factor)

A lease payment is depreciation plus a rent charge. Depreciation = (net cap cost − residual) ÷ months. The rent charge = (net cap cost + residual) × money factor, where the money factor = APR ÷ 2400. The finance charge is applied to the sum of what you owe now and the residual, so the divisor is 2400 and not 1200. Then provincial sales tax is added to each payment, payment × (1 + rate), not to the full car price. Tax also applies to a lease down payment (cap-cost reduction), the acquisition fee and, at turn-in, the disposition fee and any excess-km charge.

Sales tax, the Canadian way

Buying: you pay tax on the entire price once (usually rolled into the loan). Leasing: you pay tax on each payment and on the cash and fees around the lease, never on the full price. Spreading it out lowers lease cash flow, but you keep paying it for as long as you lease. Combined GST/HST/PST/QST rates used, as of August 21, 2026: ON 13% and NB/PE/NL 15% HST, BC/MB 12%, SK 11%, QC 14.975%, NS 14%, and AB plus the territories 5% GST. British Columbia charges a higher PST rate on passenger vehicles priced at $55,000 or more; this tool applies the general rate, so a BC result above that price understates the tax. Private used-car sales are taxed differently (e.g. ON's 13% on the greater of price or wholesale value); those aren't modelled here.

Equity, depreciation & the horizon

The car's resale value follows an editable curve: −year 1% the first year, then −later% compounding each year after. Equity = resale value − remaining loan balance, and every view credits equity, never raw resale value: if the horizon ends before the loan does, the balance still owing is subtracted, and when the car is worth less than the loan (negative equity) the shortfall counts as a cost. The lease-term view compares leasing and handing the car back with buying and selling when the lease would end. The ownership-horizon view compares buying on day one with leasing, then buying the car out for its residual plus sales tax. The buyout is financed at your loan rate and term, the same as the purchase, and any balance left at the end of the horizon is netted against the car's value. Both paths then own the same car, so its resale value cancels out over the horizon: depreciation decides the lease-term winner, not the long-run one. A horizon equal to the lease term hands the car back with its turn-in charges; a shorter one counts the lease costs paid so far.

Upkeep and insurance

Maintenance after warranty starts after a typical 3-year comprehensive warranty and is charged to whoever has the car that month: the buyer, the lessee, or a lessee who bought it out. Both options drive the same car, so it raises both totals equally and never changes which one wins. The lease insurance premium (leases often require higher liability limits) applies only while you lease.

Kilometres & the lease penalty

If you drive more than the lease allowance, the excess is charged when you hand the car back: (your km − allowed km) × years × $/km, plus sales tax. Buying has no such cap, and buying out the lease avoids the charge. The acquisition and disposition fees ($595 / $395 assumed, plus tax) apply to the lease side only, and the disposition fee only when the car goes back.

Reading the charts

Item by item starts at leasing's net cost over the lease term and adds each difference to reach financing's: cash up front (your down payment against the lease's signing cash), payments, the lease insurance premium, turn-in charges and the equity a buyer keeps. The steps add up exactly to financing's net cost. Break-even value: financing's net cost falls a dollar for every dollar the car is worth at lease end, so the two tie at break-even = your estimated value + (financing net cost − leasing net cost). Cumulative cost plots, at the end of each year (every few months when the horizon is not a whole number of years), the cash paid by then (down payment or signing cash, payments, the lease insurance premium, upkeep, the buyout loan) minus equity, joined by straight lines, so each line ends on its ownership-horizon total; the marker shows where the lines last cross. Payments by year shows the average monthly loan, lease or buyout-loan payment in each year, before insurance and upkeep.

Business use

If you're self-employed, the CRA caps lease deductions (~$1,100/mo + tax, 2026) while a purchase is written off through Capital Cost Allowance on a Class 10/10.1 cost ceiling near $38,000. For pricey vehicles leasing can yield a bigger deduction, see the HST for self-employed and business loan tools.

What this doesn't model

Manufacturer cash incentives or subvented ("teaser") lease rates, trade-in tax credits, GAP insurance, early lease-termination penalties, excess wear-and-tear charges or a purchase-option fee at lease end, a different interest rate on the buyout loan, the opportunity cost of a down payment invested elsewhere, and luxury-vehicle taxes. Every total adds up plain dollars as they are paid over the years, with no discounting or inflation adjustment. Also see student loan and debt consolidation for other borrowing decisions.