How to calculate the total cost of your car lease in Canada
Get the sales price of the car. This is the price that you negotiate with the dealership, not the manufacturer-recommended price. You can find an estimate on sites like the Canadian Black Book.
Subtract the down payment. The down payment is the amount you pay upfront for the car and reduces the amount left for you to pay.
Subtract the resale price. Also known as the “estimated resale value,” this is what the car is worth at the end of the lease. Typically this is around 55% of the sale price of the car.
Calculate the interest. Divide the interest rate by the number of payments and multiply the result by the figure you got in step 3.
Calculate the total cost. Add the result to the figure you got in step 3.
Want to know how much you’ll pay each month? Divide the total cost by the number of payments on your lease. To make it easier, use a lease payment calculator in Canada to work out exactly how much your lease will cost.
How to calculate the difference between 2 car lease options
When you’re calculating different car leases to see which will work better for your budget, you can use these examples to help guide your expectations:
Car lease offer A
Car lease offer B
Sale price
$25,000
$20,000
Estimated resale value
$16,000
$12,000
Down payment
$2,000
$1,500
Sales tax
13%
13%
Lease term
3 years
4 years
Interest rate
4.90%
6.90%
Monthly payment
$309.28*
$252.07*
Total cost
$11,134.08*
$12,099.36*
*Also takes into account costs such as depreciation fees, lease fees and other applicable taxes.
interest% ÷ number of payments × $car cost = $partial cost
Step 5:
$partial cost + $car cost = $total lease cost
How much is a lease on a $45,000 car?
You can use a lease payment calculator in Canada to work out the cost of a $45,000 car lease. We estimated that it could cost between $683.86 and $697.46 per month to lease a $45,000 car. As you can see in the table below, the lease term and interest rate you get can both have a major impact on the total cost of leasing a car.
Car lease offer A
Car lease offer B
Sale price
$45,000
$45,000
Estimated resale value
$25,000
$20,000
Down payment
$5,000
$5,000
Sales tax
13%
13%
Lease term
3 years
4 years
Interest rate
6.99%
7.99%
Monthly payment
$683.86
$697.46
Total cost
$24,618.96*
$33,478.08
What do these car lease terms mean?
Sale price. The vehicle price can be either the manufacturer suggested retail price (MSRP) or the price you’ve negotiated. It will be the baseline you use to calculate your monthly payment and the total cost of your lease.
Down payment. Most leases require that you have a down payment that covers at least 10-20% of the vehicle’s value. However, the exact down payment you need will depend on your income and creditworthiness — the stronger your application, the smaller your down payment will likely have to be.
Estimated resale value. The estimated residual value is the amount the vehicle will be worth after the lease period ends. It typically accounts for depreciation as well as mileage and average wear and tear.
Sales tax. Sales tax is often bundled in the cost of your lease. The exact amount you pay will depend on both provincial/territorial and federal law.
Lease term. The lease term is the amount of time you’ll be driving — and paying for — your vehicle. Usually, it lasts anywhere from 2-4 years.
Interest rate. The interest rate will have the most impact on the cost of your lease. It’s often referred to as the lease factor and will be written as a decimal.
What is the interest rate on car leases?
The interest rate you’re charged on a car lease will depend on what you can qualify for based on factors like your credit score and income. In general, you can expect to pay a car lease interest rate of anywhere between 3% and 15%. If you have an excellent credit score and sizable income, you may even be eligible for a 0% interest rate for a set amount of months on your car lease.
The best way to find out what interest rates you’re eligible for on your car lease is to discuss your options with the dealership you’re interested in. You can then use a lease payment calculator in Canada to work out how much you’ll pay.
Not sure leasing is right for you? Compare car loan options
What other costs should I consider when calculating the total cost of a car lease?
When you decide to lease a car, there are other factors to consider than just the interest rate and monthly payment. Insurance, extra mileage and excessive wear can all increase the price of your vehicle.
Insurance. Your lessor will likely require that you carry full coverage during your lease term. Depending on the make and model of your vehicle — as well as any past accidents — this can add hundreds or even thousands of dollars to the yearly cost of your lease.
Extra mileage. Most leases come with a set number of kilometres you can drive each year, usually around 20,000. If you go over, you may be charged a fee per km.
Wear and tear. If there’s any excessive wear on your vehicle, you may be charged a fee for damages and for potentially reducing the car’s resale value.
Drive-off fees. Also known as the down payment, this is the amount you put down to drive the car off of the lot.
Rebates and incentives. Some dealerships offer discounts like rebates to get you to buy their lease. Factor these in to get an idea of how much you’ll end up paying.
If you prefer to be behind the wheel of the latest car model or only plan on driving a few thousand kilometres each year, a car lease might be right for you. But using a car lease calculator can help you work out the cost of a car lease in the short and long term, allowing you to find a lease that works with your budget and lifestyle.
Matt Corke is Finder's head of publishing for rest of world and New Zealand. He previously worked as the publisher for credit cards, home loans, personal loans and credit scores. Matt built his first website in 1999 and has been building computers since he was in his early teens. In that time, he has survived the dot-com crash and countless Google algorithm updates.
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