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HomeDriver's ResourcesLease Takeovers: How They Work In Ontario

Lease takeovers, also known as lease transfers or lease assumptions, are relatively common in many places, including Ontario, Canada. They can be a useful option for individuals looking to exit a vehicle lease early and for those looking to assume a lease without the long-term commitment. Here’s a breakdown of how lease takeovers work in Ontario:

1. Reasons for a Lease Takeover

  • Original Lessee: They might need to get out of the lease due to financial reasons, moving out of the country, or simply wanting a different vehicle.
  • New Lessee: They might be interested in a shorter lease term than what’s typically offered, avoid down payments, or they could be seeking a particular vehicle model that isn’t readily available.

2. Finding a Lease to Take Over

There are several platforms and websites dedicated to listing available lease takeovers. Some popular websites in Canada include Leasebusters and LeaseCosts Canada.

3. The Transfer Process

  • Credit Check: The new lessee (person taking over the lease) will typically need to undergo a credit check. This is to ensure they can afford the lease payments.
  • Transfer Fee: There is usually a fee involved in the transfer of the lease. This fee can be paid by either the original lessee, the new lessee, or split between both parties, depending on their agreement.
  • Documentation: All parties will need to complete paperwork, which includes details about the lease and its terms. This paperwork will be submitted to the leasing company.
  • Approval: Once the paperwork is submitted, the leasing company reviews it and, if everything is in order, approves the lease transfer. This can take a few days to a couple of weeks.

4. Responsibilities & Considerations

  • Lease Terms: The new lessee must abide by the original terms of the lease. This includes any stipulations about wear and tear, mileage limits, and maintenance.
  • Vehicle Condition: The new lessee should inspect the car for any damage or excessive wear and tear. They’ll be responsible for any fees at the end of the lease related to damage or overuse, even if it was from the original lessee.
  • Warranty: The new lessee should confirm whether the vehicle’s warranty covers the entire lease duration.

5. Ending the Lease

At the end of the lease, the new lessee typically has the same options as the original lessee would have had: return the vehicle, purchase the vehicle for the residual value, or possibly extend the lease. They should also be aware of any penalties for excess wear, tear, or mileage.

6. Ontario-Specific Regulations

Ontario has specific regulations concerning consumer protection in lease agreements. It would be wise for both parties to familiarize themselves with the Consumer Protection Act to understand their rights and responsibilities.

In conclusion, a lease takeover can be beneficial for both parties when done correctly. It’s essential to do your research, understand the terms, and ensure the vehicle is in good condition to avoid any surprises down the road.

Are lease takeovers a good idea?

signing lease documents

Whether a lease takeover is a good idea depends on the perspective (i.e., whether you’re the original lessee looking to exit a lease or the new lessee wanting to assume a lease) and the specific circumstances. Here’s a breakdown of the pros and cons for both parties:

For the Original Lessee (Person Exiting the Lease):


  1. Flexibility: If you need to exit a lease early (e.g., financial changes, moving, or simply desiring a different vehicle), a lease takeover can be a way out without facing hefty early termination fees.
  2. Cost Savings: Depending on the deal structure, you might save money compared to terminating the lease outright, especially if the new lessee is willing to cover the transfer fees or other related costs.


  1. Transfer Fees: Some leasing companies charge fees for transferring a lease. Depending on the agreement with the new lessee, the original lessee might have to bear this cost.
  2. Liability Concerns: Some leases may have stipulations where the original lessee remains partially liable even after transferring the lease. It’s essential to read the lease agreement carefully and understand any lingering responsibilities.

For the New Lessee (Person Assuming the Lease):


  1. Shorter Term: A lease takeover often has a shorter term than a brand-new lease, ideal for those not wanting a long-term commitment.
  2. No Down Payment: Typically, when you assume a lease, you don’t need to make a down payment, saving upfront costs.
  3. Attractive Deals: If the original lessee made a significant down payment, the monthly payments could be lower than if starting a new lease.
  4. Immediate Availability: Unlike waiting for a specific new car model or configuration, an existing lease is usually readily available.


  1. Wear and Tear: The vehicle might have wear and tear or maintenance issues that become your responsibility.
  2. Limited Warranty: If the vehicle is older, the manufacturer’s warranty might expire before the lease term does, potentially resulting in out-of-pocket repair costs.
  3. Less Negotiation: When assuming a lease, you’re accepting the terms of the original lease. This means you might have less room to negotiate the monthly payments or other conditions.
  4. Potential for Higher Insurance Costs: Sometimes, insurance rates can be higher for leased vehicles, especially if the car is a luxury or high-performance model.


Whether a lease takeover is a good idea depends on individual needs, financial situation, and market conditions. Both parties should conduct thorough research, inspect the vehicle, and understand the lease agreement in detail. It can be helpful to consult with financial or legal professionals to ensure you’re making a well-informed decision.

Do you pay tax on a lease buyout in Canada?


Yes, in Canada, when you buy out your leased vehicle at the end of the lease term (or earlier in some cases), you will typically need to pay the applicable sales tax on the buyout amount (residual value). The specific tax rate and details can vary depending on the province or territory.

Here’s a general breakdown:

  1. GST/HST: At the federal level, the Goods and Services Tax (GST) is applicable. In provinces where the Harmonized Sales Tax (HST) is used, the HST replaces both the federal GST and the provincial sales tax. HST rates vary by province.
  2. PST: In provinces that do not use HST, you may be required to pay the provincial sales tax (PST) on the buyout amount.
  3. QST: In Quebec, the Quebec Sales Tax (QST) is applicable.

The specific percentage for each of these taxes varies by province or territory. When you’re considering buying out your lease, it’s essential to factor in these taxes to understand the full cost. Additionally, there might be other fees associated with the buyout, depending on the lease agreement and the leasing company.

Always consult with your leasing company or a local expert when considering a lease buyout to ensure you’re fully aware of all costs involved.

Car lease transfer fee Ontario

In Ontario, when you’re transferring a car lease (often referred to as a lease takeover or lease assumption), the leasing company usually charges a transfer fee. This fee is to process the lease transfer from the original lessee to the new lessee.

The lease transfer fee varies widely between leasing companies. Some companies may charge as little as $100, while others might charge $500 or more. The exact fee will depend on the leasing company’s policies.

Can you make money on a lease takeover?

car lease

While it’s not typical for individuals to “make money” in the traditional sense with a car lease takeover, there are scenarios in which a lease transfer can result in financial benefits or reduced losses for one or both parties. Here are some ways this can happen:

  1. Incentives from the Original Lessee: If someone is eager to get out of their lease, they might offer cash incentives to make the deal more attractive to potential takers. For example, the original lessee might offer to pay the lease transfer fees or even provide a cash incentive to reduce the effective monthly payments for the new lessee. In this situation, the new lessee can benefit financially from taking over the lease.
  2. Down Payments and Initial Deposits: If the original lessee made a significant down payment at the beginning of the lease, this would have reduced their monthly payments. A new lessee who takes over the lease can benefit from these lower monthly payments without having made the initial down payment. However, this doesn’t translate to “making money” but rather “saving money.”
  3. Market Value vs. Residual Value: At the end of the lease term, if the market value of the car is higher than the residual value (the buyout price), the new lessee could potentially buy the car and sell it at a profit. However, this involves a fair amount of risk, as predicting future car values can be challenging.
  4. Equity in the Lease: In some rare scenarios, a car’s value might depreciate slower than the calculated rate in the lease agreement. If a lessee wants to get out of the lease early and the current market value of the car is higher than the remaining lease payments and buyout price combined, there’s potential equity in the lease. The original lessee could sell the lease and ask the new lessee for an upfront payment to tap into this equity, but this scenario is uncommon and requires the right market conditions.

While there are opportunities for financial benefits in a lease takeover, they’re typically more about saving money or reducing losses rather than making a profit. Both parties should thoroughly assess the terms and conditions, inspect the car, and understand the financial implications before proceeding with a lease takeover.

About the Author: Valerie D. Hahn

Valerie is an insurance editor, journalist, and business professional at RateLab. She has more than 15 years of experience in personal financial products. She strives to educate readers and ensure that they are properly protected.

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