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Compare leasing, financing and lease-buyout costs using payment, equity, residual value, kilometres, tax and fees.
Direct answer
For a $42,000 vehicle over 48 months: Finance is cheaper with a total modeled cost of $29,753 (Finance net cost: $29,753 vs Lease & return: $30,684).
Model finance payments and remaining equity against lease cashflows and residual buyout terms.
Evaluating at 48 months (4 years)
Financing saves approximately $0 compared to leasing and returning the vehicle.
$29,753
Outcome
Finance is cheaper
Lowest modeled cost is $29,753.
Finance net cost
$29,753
Payments, down payment, remaining balance minus resale value.
Lease and return
$30,684
Down payment, lease payments and kilometre overage.
Lease with buyout
$57,174
Lease return cost plus residual buyout, tax and fee.
Canadian lease contracts charge between 12¢ and 20¢ for every kilometer driven over your contract allowance at lease turn-in.
Allowed over 4 yrs
80,000 km
20,000 km/yr limit
Estimated Overage
+24,000 km
Above contract limit
Turn-in Penalty Due
$3,840.00
Adds +$80/mo to real cost
6 key tests before deciding between leasing or financing your next vehicle in Canada.
Standard Canadian leases allow 16,000–20,000 km/year. If your commute changes or you take road trips, overage charges (15¢–25¢/km) can add $2,000+ at return.
Financing taxes the full vehicle price upfront (e.g. 13% HST in ON). Leasing only taxes each monthly payment, reducing tax paid if you return the car after 3–4 years.
Most OEM Canadian leases (Honda, Toyota, BMW, Ford) include complimentary GAP protection. Dealer finance loans do not, requiring separate insurance evaluation.
Lease contracts often charge a $400–$600 disposition fee if you return the car rather than buying it out or leasing another vehicle from the same brand.
At month 48 or 60, financing leaves you with a debt-free asset with trade-in value. Leasing leaves you with zero equity unless market value exceeds your residual buyout.
Scratches over 2 inches, windshield chips, or tire tread below 4/32" will be billed at lease return unless repaired beforehand or covered by lease protection.
Continue optimizing your vehicle purchase and ownership costs.
Determine if dealer low APR financing or manufacturer cash rebate wins.
Model depreciation, gas, and insurance over 1 to 10 years of vehicle ownership.
Check if getting a mechanic appraisal reduces 13% RST on vehicle book value.
On a $42,000 vehicle in ON, this example compares a 72-month finance loan against a 48-month lease over a 48-month comparison horizon. The lease payment is about $577 per month, while the finance payment is about $680. The final decision depends on equity, buyout value, kilometres and whether you want to own the vehicle at the comparison date.
Finance net cost = down payment + payments made + remaining loan balance - expected resale value. Lease return cost = down payment + lease payments + kilometre overage.
A lease can have a lower payment but adds kilometre limits, residual assumptions and buyout decisions. Financing can cost more monthly but may leave equity.
This is a planning estimate. It excludes exact contract wording, insurance, maintenance, wear-and-tear charges, disposition fees not entered and lender approval.
Verified July 30, 2026. Use the lease agreement, finance contract and dealer/lender disclosures before signing.
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