I am retired, collecting a pension, CPP & OAS. I also have money in my RSP, which becomes taxable when I withdraw it. I purchased, for cash & a trade-in, a 2014 BMW SUV. Sale price was $39000. This vehicle is now coming up to the 4 year warranty & full servicing anniversary, which means it will no longer covered. I believe it is probably worth $25000 as a trade-in on a purchase price of approximately $50000 or so. I would now like to replace it with a newer model BMW SUV which will again be covered for servicing & warranty. My dilemma is - do I withdraw funds from my RSP & have my OAS clawed back or do I lease the new purchase?
Presumably if you are retired you will be drawing down from your RRSP at some point, so the issue of whether to do it now or later becomes a cost benefit analysis. Assuming your income is unlikely to change in the future most of the variables cancel out and it becomes a question of whether you are likely to pay more on a lease over that period of time compared to the growth of whatever investments you are holding in your RRSP.
So the calculation should be (Additional cost of leasing a vehicle) - ($25000 * whatever rate your RRSP has been growing by historically).
*Note: this answer ignores the effects of reduced taxes on capital gains from dividends your investments may be paying out as the effect should be marginal.