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Having a car is typically a required commodity to help take Canadians to and from work, as well as to run errands, bring the kids to their extracurricular activities, and just to have handy when commuting somewhere is required. But a car is a hefty purchase, usually requiring some level of financing assistance to help make the transaction a reality.

While there are leases and financing options available, another potential option that’s not as well-known is a “lease takeover.” In fact, a lease takeover can get you the car you want while helping you save quite a bit of money.

So, what is a lease takeover and is it the right financing program for you to buy your next vehicle?

What’s better for you? Leasing a car or buying it? Find out here.

What is a Lease Takeover?

Basically, a car lease takeover involves the transfer of a current lease transfer from the seller to you. In this transaction, the lease would be transferred over to you so that you now take over the contract and are responsible for making lease payments and following all other terms of the lease.

Can’t make your car payments? Consider voluntary repossession

Sellers usually agree to these arrangements when they want to get out of their lease earlier than the original end date. Rather than suffering a penalty for bailing on the lease with the dealer, the seller can simply look for a buyer who is willing to take over the lease along with the vehicle. In turn, you would inherit both the contract and the car in its current condition.

This can be a great way to get a good deal on a good car if the vehicle is still in decent condition and the terms of the lease are fair.  

Factors to Consider When Opting for a Lease Takeover

Here are some of the important components of car leases that you should become familiar with before agreeing to be part of a lease takeover:


Every lease has a term, which is the length of time that the lease contract is in effect with the current lender. If you take over the lease, you’ll be subject to the conditions of the contract for the remaining part of the term.

Residual Value

This refers to the car’s value at the end of the term. Leasing companies predetermine the anticipated value of the car at the end of the term versus what it’s worth when it was brand new. If you want to keep the car at the end of the term, that residual value is the price you’ll have to pay.

Market Value

This refers to the private resale value of the vehicle, which doesn’t necessarily have to be the same as the residual value. A high resale value can help you get better deals in the future if you ever decide to trade in the car for a new one.


There are numerous fees to beware of when opting for a lease takeover. For example, there are typically fees associated with the transfer of a car lease from seller to buyer. There can also be hidden penalty fees for outstanding violations. It’s important to check the vehicle’s history and get a vehicle inspection prior to transferring the lease.

Kilometre Limits

Leases typically stipulate how many kilometres you’re allowed to put on a leased vehicle every year. If you go over that limit, there could be fees applied. Typically, the limit is around 20,000km to 25,000km.

Wear and Tear

This refers to the amount of deterioration that the car suffers by the end of the lease term and what is considered normal by the leasing agency. Anything that is deemed beyond normal wear and tear will require a fee to accommodate.

Commuting to Work in Canada

Take a look at this infographic to see the costs of commuting to work in Canada.

What Type of Car Can I Get With a Lease Takeover?

The awesome thing about a lease takeover is that it does not restrict the type of vehicle you decide to buy. Virtually any car is within reach with a lease takeover, as long as there are willing sellers, including the following.

MinivanSports carsCrossovers
Compact carsConvertiblesPick-up trucks
HatchbacksStation wagonsLuxury cars
Midsize sedansSUVsCommercial trucks

Brands Eligible for a Lease Takeover

FiatLand RoverVolkswagen
New vs. Used Cars

Not sure if you should get a new or used car? Check out this infographic.  

Pros and Cons of a Lease Takeover


There are plenty of benefits of taking over a lease, including the following:

  • Lower price tag – Compared to buying new, a lease takeover can help you save quite a bit of money. 
  • Lower start-up expenses – There’s no need to come up with a down payment with a lease takeover, unlike other financing options.  
  • Lower payments – Car loans typically come with relatively high monthly car payments, but such is not usually the case with a lease takeover. With this arrangement, you pay for the depreciation of the vehicle for the duration that you use it.
  • Sell for a profit – If the vehicle winds up with a higher market value compared to its residual value by the end of the lease, you could potentially sell it for a profit after purchasing it at the end of the term.


In addition to the advantages of a lease takeover, there are also a few drawbacks to such an arrangement:

  • Kilometre limits – With a lease, you’re stuck driving no more than the stipulated kilometre limit specified in the contract. If you happen to drive a lot, you could easily go over that limit. If that happens, there could be financial penalties to pay.
  • Restrictions on wear and tear – You could be stuck paying extra fees if the current condition of the vehicle is worse than what’s considered to be normal wear and tear.
  • Hidden car lease fees – There could be “turn-in” or “lease transfer” fees included in the contract. If there are, you could be paying more than you thought at the onset. Also, some hidden fees can include things like outstanding violations, including unpaid tickets.

Trying to cut the cost of your car? Click this link to learn how you can.  

How To End Your Lease Early

Usually, you’re supposed to stick with your car lease until the term expires. But what if you want to get out of your car lease early? Is that even possible?

There are some services that help car owners who are part of a lease agreement get out of their lease early. They charge a fee for their services, but it could be worth it if you’re serious about breaking your lease early and getting out of your monthly lease payments.

Looking to Get a Lease or Car Loan?

If buying a car is on your agenda, let Loans Canada help. We’ll help you find the right lease or car financing program with terms and services that closely match your needs. Get in touch with Loans Canada today.

Lisa Rennie avatar on Loans Canada
Lisa Rennie

Lisa has been working as a personal finance writer for more than a decade, creating unique content that helps to educate Canadian consumers in the realms of real estate, mortgages, investing and financial health. For years, she held her real estate license in Toronto, Ontario before giving it up to pursue writing within this realm and related niches. Lisa is very serious about smart money management and helping others do the same.

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