Lease Rate Calculator Canada
Estimate your monthly Canadian vehicle lease payments, including GST/HST/PST.
How Does Vehicle Leasing Work in Canada?
Leasing a vehicle in Canada differs significantly from traditional financing. When you lease, you aren't paying for the entire value of the car. Instead, you are paying for the depreciation that occurs during the time you drive it, plus a lease fee (interest) and applicable provincial taxes.
Key Components of the Lease Calculation
To use the Lease Rate Calculator Canada effectively, it is important to understand these specific terms:
- Net Capitalized Cost: This is the "selling price" of the vehicle after any discounts, trade-ins, or down payments are subtracted, but before taxes are applied.
- Residual Value: This is the predicted value of the car at the end of the lease term. This number is set by the manufacturer. The higher the residual, the lower your monthly payment.
- Lease Term: The duration of the contract, typically ranging from 24 to 60 months in the Canadian market.
- Lease APR: The annual percentage rate for the lease. While some US calculators use a "Money Factor," Canadian dealerships typically disclose the APR.
Understanding Canadian Sales Tax on Leases
One of the biggest advantages of leasing in Canada is the tax structure. Unlike a purchase where you pay tax on the full price upfront, in a lease, you only pay GST/HST/PST on the monthly payment. For example, if you live in Ontario, you will pay 13% HST on each monthly installment rather than 13% on the $40,000 car price at the start.
Example Calculation
Suppose you lease a vehicle with a Net Capitalized Cost of $40,000 and a Residual Value of $22,000 for 36 months at an APR of 5% in Ontario (13% tax):
- Depreciation Fee: ($40,000 – $22,000) / 36 = $500.00
- Finance Fee: ($40,000 + $22,000) * (0.05 / 2400) = $129.17
- Monthly Subtotal: $500.00 + $129.17 = $629.17
- Total with 13% HST: $629.17 * 1.13 = $710.96
Why the Residual Value Matters
In Canada, luxury vehicles often have higher residual values, which can sometimes make a $60,000 European sedan cheaper to lease than a $50,000 domestic SUV if the SUV's value drops faster. Always check the residual percentage when comparing lease offers at Canadian dealerships.