Compare the true total cost of leasing versus buying a vehicle in Canada — including taxes, fees, and residual value.
| Cost Item | Buy | Lease |
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When you buy a vehicle, you are paying for full ownership. You take out a loan (or pay cash), make monthly payments, and at the end of the loan term the car is yours free and clear. You can drive it as long as you like, modify it, and sell it whenever you choose.
When you lease a vehicle, you are essentially renting it for a fixed period — typically 24 to 48 months. Your monthly payments cover the vehicle's depreciation during that time (the difference between its purchase price and its residual value at lease end), plus interest (expressed as a "money factor"). At the end of the lease you return the car, buy it out at the residual value, or lease a new vehicle.
One important Canadian difference: when you buy a vehicle, you pay sales tax on the full purchase price upfront. When you lease, in most provinces you pay tax only on each monthly payment — not the full vehicle value. This can make leasing appear significantly more tax-efficient in high-tax provinces like Ontario (13% HST) and Nova Scotia (15% HST).
However, Quebec is an exception — QST applies to the full capitalized cost of the lease, not just the payments, which reduces this advantage for Quebec residents.