Car Lease Transfer in Ontario: How it Works

3 minutes can save you hundreds. Enter your postal code below and join thousands of Canadians saving on insurance.

Secure. No Spam. No Fees.

Why You Can Trust MyChoice

MyChoice serves as an independent intermediary between you, financial institutions and licensed professionals without any additional charge to our users. In the interest of transparency, we disclose that we partner with some of the providers we write about – we also list many financial services without any financial gain. MyChoice does not operate a financial institution or brokerage and to ensure accuracy, our content is reviewed by licensed professionals. Our unique position means that we hold no recurring stake in your policy, ensuring our mission to help Canadians make better financial decisions is free of bias or discrimination. 

Article Contents
By <span>Aren Mirzaian</span>
By Aren Mirzaian

Updated on January 16, 2024

Visit author page
By <span>Aren Mirzaian</span>
By Aren Mirzaian

Updated January 16, 2024

Visit author page

3 minute read

Article Contents
Car Lease Transfer: How it Works

Have you ever wondered about the ins and outs of a car lease transfer? Whether you’re eyeing a new vehicle or your circumstances have changed, understanding how to navigate a lease takeover is crucial. In this comprehensive guide, we’ll explore everything you need to know about car lease transfers in Ontario, including how they affect your car insurance policy in Ontario.

What Are My Options to End a Car Lease?

Regardless of perspective, terminating a lease early is typically not financially advantageous. Therefore, the available choices revolve around selecting the one with minimal financial detriment. The options you have include:

  • Return the Vehicle: This option is often the least favourable due to the substantial penalties and remaining depreciation fees.
  • Purchase the Vehicle: You can buy the car or find a buyer through advertising.
  • Trade-In at a Dealership: Opting to trade in the car at a pre-owned vehicle dealership is another route, although it might result in a reduced sale price because of the dealership’s commission.
  • Dealer Trade-In with Short Lease Term: If you have 2-3 months left on your lease, negotiating with the dealer to trade it for a new vehicle might be possible, especially during promotional offers.
  • Roll Over Negative Equity: Consider rolling negative equity into a new car lease or purchase.
  • Lease Transfer: One of the better options is transferring your lease to another individual.
What are your options to end a car lease?

What is a Lease Transfer?

In Canada, in recent years, a scarcity of vehicles has led to an increase of up to 40% in the prices of both new and used cars. In 2023, the average cost of a passenger vehicle in Canada is slightly above $45,000, representing a 30% increase since 2019. With cars being such an expensive purchase, it’s no wonder many people prefer leasing a car over buying or financing one. But what occurs if you cannot maintain possession of the car for the duration specified in the contract? A lease takeover, also known as a car lease transfer, can help you as it involves passing your leased vehicle and its associated obligations to another person. This process can be a lifesaver for those needing to exit a lease early without hefty penalties. But how does it work, and what should you consider before diving in?

How Does a Lease Takeover Work in Ontario?

  • Understanding Lease Terms: The first step in a lease transfer is thoroughly understanding your current lease terms. This includes the duration, monthly payments, mileage limits, and any lease transfer fees.
  • Finding a Lease Buyer: After understanding your lease terms, the subsequent step involves locating an individual willing to assume your lease. This can be done through word-of-mouth, online marketplaces, or specialized lease transfer websites.
  • Credit Checks and Approvals: The prospective lease transferee is required to pass a credit evaluation and receive approval from the leasing company. This ensures they’re financially capable of taking over the lease payments. According to Equifax, credit scores from 660 to 900 are generally considered good, very good, or excellent.
  • Transfer Fees: Be aware of any transfer fees charged by the leasing company. These fees vary but are a necessary part of the lease transfer process.
  • Finalizing the Transfer: Once everything is approved, the lease is officially transferred to the new lessee. The original lessee is typically relieved of all responsibilities related to the lease.
The mechanics of a lease transfer

Benefits and Drawbacks of a Lease Takeover


  • Flexibility: Lease takeovers offer flexibility for both the original and new lessee. The original lessee can exit their lease early, while the new lessee can enjoy a shorter-term lease commitment.
  • Cost-Effective: For the new lessee, taking over a lease can be more cost-effective than starting a new lease. They might benefit from lower monthly payments and avoid down payments.
  • Variety of Choices: Lease takeovers offer the flexibility to drive different vehicles without being tied to a long-term lease or purchase commitment.


  • Transfer Costs: The lease contract includes fees for transferring and ending the lease, plus additional taxes.
  • Mileage Limits: Ensure the car’s mileage is below the annual limit, with enough allowance for your use until the lease ends.
  • Wear and Tear: Avoid vehicles with significant wear and tear to evade repair costs, especially for substantial body damage and scratches.
  • Hidden Repairs: Have a mechanic inspect the vehicle for unseen issues to avoid costly repairs later.

Considerations for Lease Takeovers

Assuming a lease transfer can be cost-effective, you need to locate a suitable vehicle with favourable terms. Additionally, understanding the following risks and fees involved in a lease takeover is essential:

  • Transfer Charge: Numerous contracts include a fee for transferring the vehicle to a different driver, typically ranging from $300 to $500. Most individuals seeking to exit a lease are willing to absorb this cost.
  • Mileage Limits: Be mindful of the mileage limits on the lease. Exceeding these limits can result in significant fees.
  • Vehicle Condition: The new lessee should inspect the vehicle’s condition to avoid any surprises at the end of the lease term, especially regarding wear and tear.
  • Insurance Requirements: Insurance is essential even if you don’t own the vehicle you’re driving. Ensure the vehicle’s insurance coverage meets your needs and is transferred appropriately for a lease transfer. Opting for a lease takeover won’t impact your auto insurance in Ontario. However, when considering a lease takeover, it’s important to consider factors like the vehicle’s model, features, model year, and safety rating, as these will influence the insurance premium you’ll pay.

The Bottom Line

Car lease transfers offer a practical solution for those needing to exit a lease early or seeking a short-term vehicle option. By understanding the process, benefits, and considerations, you can confidently navigate lease takeovers. Whether in Ontario or elsewhere, this guide provides the essential information to embark on a lease transfer journey.

Congratulations! You made it to the end!

Now, here is the easy part: complete your quote in under 2 minutes

Discover More About

The Alberta government has announced a comprehensive reform of the auto insurance system, set to take effect in 2024. Read on to learn more.
Learn about ten essential car maintenance tips that every vehicle owner should know, whether auto insurance covers car maintenance and more.
Learn about intricacies of taxes on used vehicles in Ontario, and get insights and tips ob how to navigate this aspect of car ownership.

Even More Ways To Save