Lease calculator

Our lease calculator can help you make informed decisions about acquiring assets, and helping you understand the financial implications and commitments associated with leasing arrangements.

Ian Hawkins

Page written by Ian Hawkins. Last reviewed on July 5, 2024. Next review due April 1, 2025.

3 years
3 years

This calculator is intended for illustration purposes only and exact payment terms should be agreed with a lender before taking out a loan.

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What is a lease?

Most businesses need expensive assets to produce the goods and services they sell. These assets are typically cars, vans, plant, and machinery. Without them, many businesses simply cannot function. However, buying big-ticket items can create problems with cash flow, and for companies with seasonal finances, spending a large sum all at once may be impossible. But not to worry. Say hello to the finance lease – the low-cost way for businesses to secure the major tools they need.

Buy over time with a low deposit. Roll maintenance and repairs into the deal. Reclaim tax and GST. Finance leasing is fast, flexible, and affordable. Give your business what it needs without creating a financial crunch.

How does a lease work?

The term ‘lease’ has become popular in asset financing that is not a dedicated purchase agreement (such as hire purchase). In fact, there are three main types of lease:

Finance lease

A finance lease lets your business use an asset for a fixed period and a fixed monthly rental cost. At the end of the agreement, the business can purchase the asset for a pre-agreed sum. A finance lease helps businesses spread the cost of the asset over time with lower monthly payments than outright purchase. In many cases, (except for company cars), businesses can reclaim 100% of the GST/HST on the monthly cost – including any maintenance charges.

Operating lease

Operating lease is similar to a finance lease, but the lessee (you) cannot purchase the asset at the end of the contract. The agreement includes a residual value based on the lease period and the estimated value of the asset at the end of the contract.

At the end of the agreement, the asset is sold to a third party on behalf of the finance company. If the asset sells for more than the residual value, the finance company refunds a percentage of the surplus to you. If the asset sells for less than the residual value, you must make an additional payment to the finance company.

An operating lease allows businesses to use the asset for a lower monthly cost than finance leasing or buying an asset with hire purchase. Depending on the asset being leased, operating leases may include maintenance and repairs. In many cases, (except for company cars), businesses can reclaim 100% of the GST/HST on the monthly cost – including any maintenance charges.

Read more about finance lease vs. operating lease – what’s the difference?

Contract hire

The simplest form of lease. Contract hire is a long-term rental. The business rents the asset for a fixed term – typically 2-3 years – and pays a fixed monthly amount for its use. Maintenance and repairs are usually included. At the end of the contract, the business hands the asset back to the lessor. There is no residual value to meet and no option to buy the asset. In many cases, (except for company cars), businesses can re-claim 100% of the GST/HST on the monthly cost – including any maintenance charges.

Example of leasing

ABC Plumbers need a new van for their business. Instead of paying cash or opting for a hire-purchase agreement with higher monthly payments, they choose to lease a new vehicle. The deal they select is an operating lease. It works like this:

The van costs $25,000. The lessor (lender) offers to lease the van to ABC (the lessee) for $450 per month, including service costs, for 48 months. The residual value is set at $5,000. ABC pays a one-month deposit of $450 and drives their new vehicle away. Over four years, they pay a total of $21,600 for the use of the van. At the end of the contract, the vehicle is sold for $7,000 – $2,000 more than the agreed residual value. The lessor passes 95% of $2,000 back to ABC. They receive $1,900, which they use to lease a new vehicle and put the surplus cash back into their business.

Read more about equipment leasing and options available for you.  


The lease residual value is the anticipated market worth of an asset when a lease ends. It's crucial in lease agreements, especially in operating leases. This value affects monthly payments: higher residual value means lower payments. Businesses agree on this value upfront, and it can impact costs at lease-end based on how the asset's actual market value compares. Understanding this helps in choosing the right lease option for financial planning and cash flow management. 

Lease calculations are quite straightforward but involve a few key factors: the lease term, monthly rent, and any extra charges. Typically, you calculate it on a monthly basis by multiplying the monthly rent by the number of months in the lease term. For instance, if your monthly rent is $1,000 and the lease runs for 24 months, your total lease amount would be $24,000. Additional costs like security deposits and utilities might also factor into the calculation.


When you lease an asset, the upfront payment, or down payment, can vary based on factors like the asset type, lessor, and lease duration. Typically, aiming for 10% to 20% of the total lease amount is a good starting point. However, some leases might ask for more or less upfront. Before deciding, think about your budget, the asset's worth, and the lease terms. A higher down payment could lower your monthly costs and overall lease expenses, though it might also tie up more of your capital.

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