How to Calculate Car Lease Payments in Canada

Calculating car lease payments in Canada is the same as calculating lease payments in the U.S. Estimating the monthly lease payment before arriving at the dealership lets you estimate just how a car or truck can fit in your monthly budget. Manually estimating a lease payment is easily done, as long as you have some basic information on the car you plan to lease. In this example, a consumer is shopping for a Chevrolet Impala and knows the vehicle's sticker price, selling price, money factor, lease length and residual value.

Instructions

1

Calculate the residual value of the vehicle. Residuals are calculated as a percentage of the MSRP. The Impala in question has an MSRP of $29,995 and a 50 percent residual value. The residual is $14,997.50.

2

Calculate the total depreciation for which you are responsible. Subtract the residual value from the negotiated selling price of the Impala. If the agreed price is $26,000, subtract the residual of $14,997.50 from this amount. The total depreciation you must pay over the lease term is $11,002.50.

3

Divide this amount by the term of the lease to find the monthly depreciation. In our example, the $11,002.50 in depreciation is being leased over a 36-month term. This results in monthly depreciation of $305.62.

4

Calculate the interest portion of the monthly payment. Add the $26,000 selling price to the residual value of $14,997.50, which equals $40,997.50. Multiply this amount by the money factor, which is equivalent to an interest rate divided by 2400. For example, a 4.9 percent interest rate translates to a .00204 money factor. Multiple the total of $40,997.50 by the money factor of .00204. This results in a monthly interest obligation of $83.63.

5

Add the monthly depreciation and interest together for a total of $389.25. This is the base, pretax monthly payment on the Impala.

6

Factor retail sales tax into the monthly payment. For example, Ontario has a 13 percent harmonized sales tax (HST). Multiply the base payment by 1.13 to include the HST. After adding HST, the total monthly payment on the Impala lease is $439.85.