Buy Or Lease?

Should you lease or buy your car? Use this calculator to find out! We calculate your monthly payments and your total net cost. By comparing these amounts, you can determine which is the better value for you.

Definitions

Loan term in months

Term in months for your auto loan.

Down payment

Amount paid as a down payment, which for leases is often called a capital reduction.

Other fees

Any fee, other than a capital reduction or down payment, required to be paid at the close of the lease or loan. This may include license, title transfer fees, etc.

Purchase price

Total purchase price. Price should be after any manufacturer's rebate.

Interest rate

Annual interest rate for your loan or your lease.

GST + PST or HST (%)

Tax percentage rate charged on this purchase in your province. GST + PST or HST is included in each lease payment. GST + PST or HST for buying is charged on the total sale amount.

Rate of depreciation

The rate of depreciation gauges how fast your new automobile will lose its market value. A high depreciation rate is about 20% per year, medium is 15% per year and low is 10% per year.

Residual percent

For leases, this is remaining value after the lease term expires. The higher this amount, the lower your lease payment will be.

Market value of vehicle

Value of your auto after the lease term is over.

Investment rate of return

Rate of return on investments. This is the return that you would make if you were to invest your down payment or security deposit instead of using it in your auto purchase or lease. The actual rate of return is largely dependent on the type of investments you select. For example, for the last thirty years the average annual rate of return for the TSX is about 10%. Savings accounts at a bank or credit union may pay as little as 2% or less. It is important to remember that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment.

Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.