Compare the same vehicle three ways — paid for in cash, financed, or leased — including interest, sales tax, fees, upkeep, depreciation, and what the car is still worth when you are done with it.
Buy vs finance vs lease over 6 years
Buy with cash is cheapest
Over 6 years it costs about $4,754 less than the next best option, after the resale value of anything you still own.
True cost after 6 years
What this means
Paying cash wins here because it avoids interest entirely, and the return you would have earned on that money is smaller than the borrowing cost. It also means a large sum leaves your accounts on day one.
Cost after resale value
Every point on these lines already credits what the vehicle would sell for, after any loan is cleared. That is why paying cash does not start at the purchase price: at signing the money is gone but you own the car, so what the choice has cost you so far is the sales tax, the fees, and the value the vehicle has lost since. A returned lease leaves you nothing to sell, so its line carries the full weight of every payment. Hover to inspect any year.
Buy with cash
Lowest cost$58,971
True cost over 6 years, after the resale value of anything you still own
Per month
$819
Per kilometre
$0.49
At signing
Paid over 6 years
When you are done
Finance
$63,724
True cost over 6 years, after the resale value of anything you still own
Per month
$885
Per kilometre
$0.53
At signing
Paid over 6 years
When you are done
Lease
$79,646
True cost over 6 years, after the resale value of anything you still own
Per month
$1,106
Per kilometre
$0.66
At signing
Paid over 6 years
When you are done
Buy with cash
Best when you have the cash without touching your emergency fund, borrowing rates are high, and you keep cars for a long time.
What works in its favour
What to watch out for
Finance
Best when you plan to keep the vehicle well past the end of the loan and can put enough down to stay ahead of depreciation.
What works in its favour
What to watch out for
Lease
Best when you want a newer vehicle every few years, drive within the allowance, and value a predictable payment over building equity.
What works in its favour
What to watch out for
Sales tax rates are the combined GST, HST, or GST plus PST normally charged on a dealer vehicle purchase in each province or territory. Some provinces apply different rules to private sales, luxury vehicles, and trade-ins, so confirm the rate on your bill of sale.
Lease payments use the standard depreciation-plus-rent-charge arithmetic dealers use. A money factor quote becomes the rate in this tool when you multiply it by 2,400.
Fuel, insurance, licensing, and parking are optional because they are broadly the same whichever way you pay for the same vehicle: adding them raises every total by the same amount without changing which option wins. Insurance is the one exception worth checking, since a financed or leased vehicle normally requires collision coverage you could skip on an older car you own outright.
Every dollar paid is carried forward at your investment return so that a large cash purchase, a loan, and a lease can be compared on the same footing. Resale value uses your own depreciation assumptions, not a market quote.
Buying with cash, financing, and leasing are three ways to pay for the same vehicle, and they differ in what you own at the end. Cash and financing both end with a car in your driveway that still has resale value, while a lease ends with you handing back the keys and starting again. Financing spreads the price over a loan and charges interest on the balance; a lease charges you only for the value the vehicle loses during the term, plus a rent charge on the money the lessor has tied up.
The comparison is not just about the monthly payment, because the lowest payment usually belongs to the option that leaves you with the least at the end. A fair comparison counts what leaves your bank account, what the money would have earned if it had stayed invested, the sales tax each path attracts, the fees at signing and at lease end, the repairs an older vehicle needs, and the resale value of anything you still own. In Canada, the tax treatment matters too: a purchase is taxed on the full price at once, while a lease is taxed on each payment.
Over 6 years, paying cash costs the least: $4,754 less than financing it. Counting payments, interest, sales tax, fees, upkeep, and the value of the vehicle you still own at the end, the true cost works out to $819 a month paying cash, $885 financing, and $1,106 leasing.
Replace the defaults with the numbers on the actual quotes in front of you, especially the interest rate, the residual value, and the fees, because dealers price these three paths against each other and a promotional rate on one can reverse the ranking. Then test a shorter and a longer ownership period: financing and paying cash improve every year you keep the car past the loan, while leasing costs roughly the same every year forever. Remember that the paths are not identical in what they deliver, since leasing keeps you in a newer vehicle under warranty, so decide how much that is worth to you before treating the cheapest number as the answer.
Each path is run month by month over the window you choose. Every dollar that leaves the household is carried forward at your investment return, so a large cash payment and a small lease payment can be judged on the same terms, and whatever the vehicle is still worth at the end is subtracted.
Try the deal as quoted, then try keeping the car twice as long, then try driving further than the lease allowance. Leasing costs roughly the same every year forever, while owning gets cheaper every year you keep the car past the loan.
Confirm the interest rate or money factor, the residual value, the acquisition and disposition fees, the kilometre allowance and overage charge, and the sales tax on your bill of sale. Dealers price these three paths against each other, so a single promotional rate can reverse the answer.
No. Leasing usually has the lowest monthly payment for the same vehicle, but that is because you are only paying for the value the car loses during the term. Over a long period, buying and keeping the same car is normally cheaper because the years after the loan is paid off cost you almost nothing in capital.
Not always. If a manufacturer offers a promotional rate below what your savings or investments earn, financing can leave you better off than handing over the cash. At normal bank car-loan rates, paying cash usually wins because the interest you avoid is larger than the return you give up.
In most of Canada a purchase is taxed on the full price at the time of sale, while a lease is taxed on each monthly payment. That spreads the tax out and means you never pay tax on the part of the vehicle's value you do not use. Trade-ins normally reduce the amount you pay tax on.
The residual value is what the vehicle is contracted to be worth at the end of the lease. A higher residual means less depreciation is charged over the term, so the payment is lower. It is also the price at which you can buy the vehicle out at lease end.
Multiply the money factor by 2,400. A money factor of 0.00250 is an annual rate of 6 percent. Enter that percentage as the lease rate.
You are charged for every kilometre past the allowance when you return the vehicle, typically between 10 and 25 cents. If you regularly drive more than the allowance, buying a higher allowance up front is usually cheaper than paying the overage, and buying the car outright may be cheaper still.
Ending a lease early is expensive. Most contracts require the remaining payments or a termination charge, and a lease transfer is not always permitted. If there is a real chance you will need out within the term, that risk belongs in the decision.
A long loan with little down leaves you owing more than the vehicle is worth for the first few years. That gap matters if the car is written off or you need to sell, because the insurer pays the vehicle's value and you still owe the lender the difference.
They are optional. Fuel, insurance, licensing, and parking are broadly the same however you pay for the same vehicle, so switching them on raises every total by the same amount without changing which option wins. Maintenance and repairs are always included, since an older owned car costs more to keep on the road than a car that is replaced every few years.
Change one assumption at a time: the interest rate, the residual value, how long you keep the car, and your annual driving. The ranking often turns on how long you keep the vehicle rather than on the option itself.
Practical pathways
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