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Buying a car is cheaper over 10 years, but leasing has 30–40% lower monthly payments. The right choice depends on how long you keep vehicles, how much you drive, and your cash flow needs. Here’s the full Canadian analysis.
Lease vs. Buy: Side-by-Side ($45,000 Vehicle)
| Factor | Lease (3 years) | Buy (6-year loan) |
|---|---|---|
| Monthly payment | $495 | $735 |
| Down payment | $0–$2,000 | $5,000–$9,000 |
| Term | 36 months | 72 months |
| Own the car | No | Yes (after payoff) |
| Total 3-year cost | $17,820 | $26,460 |
| Total 10-year cost | $59,400 (3 leases) | $52,920 + maintenance |
| Mileage limit | 20,000 km/year | Unlimited |
10-Year Total Cost Comparison
| Scenario | Lease (3x 3-year) | Buy & Keep 10 Years |
|---|---|---|
| Payments | $59,400 | $52,920 |
| Down payments | $6,000 | $7,000 |
| Maintenance | $3,000 | $8,000 |
| Insurance (higher for lease) | +$3,000 | — |
| Resale value at 10 years | $0 | -$8,000 |
| Net 10-year cost | $71,400 | $59,920 |
Buying and keeping for 10 years saves about $11,500 over leasing.
When Leasing Wins
| Situation | Why Lease |
|---|---|
| Business use | Lease payments are deductible (up to CRA limits) |
| Drive under 20,000 km/year | Mileage limits aren’t a problem |
| Want newest safety tech | New car every 3 years |
| Cash flow is tight | Lower monthly payments |
| Don’t want repair costs | Covered by warranty |
When Buying Wins
| Situation | Why Buy |
|---|---|
| Keep cars 5+ years | Cheaper over time |
| Drive over 20,000 km/year | No mileage penalties |
| Want to modify vehicle | No return conditions |
| Building equity | Car becomes an asset |
| Paid-off car eventually | $0 payments for years |
Tax Implications
| Factor | Lease | Buy |
|---|---|---|
| Personal use | No tax benefit | No tax benefit |
| Business use (self-employed) | Deduct lease payments (max ~$950/month) | Deduct CCA + interest |
| GST/HST | Included in payments | Paid upfront on full price |
Bottom Line
Buy if you keep cars 5+ years and drive a lot. You’ll save ~$11,500 over a decade. Lease if you’re self-employed (tax-deductible) or want a new car every 3 years with lower payments. The worst option: buying new and trading in every 3 years — that combines the highest costs of both approaches.
See our average car payment in Canada or car loan rates for financing details.
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