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Calculate the Cost of Your Car Lease

Not sure if a lease is worth it? Use our car lease calculation guide to see how much you might pay.

How to calculate the total cost of your car lease in Canada

  1. 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.
  2. 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.
  3. 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.
  4. Calculate the interest. Divide the interest rate by the number of payments and multiply the result by the modified price of the car.
  5. Calculate the total cost. Add the result to the modified price of the car.

Want to know how much you’ll pay each month? Divide the total cost by the number of payments on your lease.

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 ACar lease offer B
Sale price$25,000$20,000
Estimated resale value$16,000$12,000
Down payment$2,000$1,500
Sales tax13%13%
Lease term3 years4 years
Interest rate4.90%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.

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.

Not sure leasing is right for you? Compare car loan options

1 - 8 of 8
Name Product Loan Amount Interest Rate Loan Term Min. Credit Score Requirements
CarsFast Car Loans
$500 - $75,000
4.90% - 29.90%
12 - 96 months
300
Min. income of $2,000 /month, 3+ months employed
Get a new or used vehicle delivered to your door.
Browse thousands of vehicles from dealers across Canada and get matched with financing that meets your needs.
Loans Canada Car Loans
$500 - $35,000
0% - 31.99%
24 - 120 months
300
Min. income of $1,800 /month, 3+ months employed
Compare rates from 60+ lenders.
Complete a single application to get quotes from different lenders. Bad credit, CERB and EI borrowers considered. 0% APR for new cars only, used car rates start at 7.99%.
Coast Capital Car Loan
$10,000 - No Max.
Varies
18 - 84 months
650
Able to service debt payment of $300/month
Competitive rates and flexible terms.
Finance new and used vehicles from one of Canada's largest credit unions. No credit union membership required. Available across Canada except SK, QC, NT, NU, YT.
Clutch Car Loans
$7,500 - No Max.
From 3.90%
12-96 months
580
3+ months employed, Max.1 bankruptcy
Pre-qualify for a loan in under 2 minutes with no impact to your credit score.
Get approved for financing in under 24 hours for the used car you want. No hidden fees. Get the vehicle delivered to your door.
Canada Drives Car Loans
$7,500 - $99,999
4.75% - 29.99%
12-84 months
400
Min. income of $1,800 /month
Buy a used car online and get it delivered to your door in under 24 hours.
Get pre-approved for financing in 3 minutes with no impact to your credit score. No fees or penalties for early loan repayment.
Carloans411 Car Loans
$500 - $50,000
1.90% - 19.99%
Up to 72 months
300
Min. income of $1,600 /month, 3+ months employed
High application approval rate.
Get connected with suitable lenders to finance your next car, van or truck. Check eligibility for this loan through LoanConnect.
Canada Auto Finance
$500 - $45,000
4.90% - 29.95%
3 - 96 months
300
Min. income of $1,500 /month, 3+ months employed
Get financing from partnered local lenders.
Financing for a new or used car is available for borrowers with bad credit, no credit, CERB, EI or bankruptcy.
Splash Auto Finance
$10,000 - $50,000
9.90% - 29.90%
24 - 84 months
300
Min. income of $2,200 /month, 3+ months employed
Apply with any credit score.
Get financing for a new or used car. Auto loans for borrowers with fair credit, bad credit, no credit or bankruptcy.
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Compare up to 4 providers

Learn about common car loan scams and see legit lenders in Canada

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.

How to lease a used car

Bottom line

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 learning how to calculate the cost of a car lease in the short and long term can help ensure you find a lease that works with your budget and lifestyle.

You can read our guide to leasing versus financing a car to learn more about your options.

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