Car Deal Canada

How Lease Takeovers Work

a person holding a car key and a lease takeover paper

A lease takeover, also known as a lease transfer or assumption, is when someone takes over the remaining payments and responsibilities of an existing auto lease from the original lessee. Lease takeovers have become an increasingly popular option for Canadians looking for a flexible and affordable way to get into a leased vehicle.


With a lease takeover, the original lessee transfers their rights and obligations under the lease to a new lessee, allowing them to exit the lease early if their circumstances change. The new lessee takes over the monthly payments without having to put down the large down payment typically required when starting a new lease.


This comprehensive guide will outline everything you need to know about how lease takeovers work in Canada. We’ll cover the process from start to finish, including where to find takeover listings, how to evaluate deals, negotiate terms, transfer the lease, and more. We’ll also look at the pros and cons to help you decide if a lease takeover is the right option for your situation.

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What is a Lease Takeover?

A lease takeover, also known as a lease assumption or lease transfer, allows someone to take over the remaining payments and responsibilities on someone else’s existing car lease contract. Essentially, the original lessee transfers the rights and obligations of the lease to a new lessee.

This process provides an “out” for the original lessee if their circumstances change, allowing them to exit the lease early by finding someone to take it over. The new lessee gets to take over the lease payments without having to put down the large down payment typically required when starting a brand new lease.

Instead of the expensive upfront costs of a new lease, the new lessee takes over the remaining monthly payments. The original lessee gets released from the lease, while the new lessee gets the benefits of driving the leased vehicle without the high initial outlay.

 

How Does the Lease Takeover Process Work?

The lease takeover process involves a few key steps to transfer the lease from the original lessee (the seller) to the new lessee (the buyer):

 

  1. Lease sellers list their lease details on sites like LeaseBusters.com, including information about the vehicle, remaining lease term, monthly payments, and mileage.
  1. Interested buyers can browse the lease takeover listings to find ones that match their needs and budget.
  1. Once a buyer finds a listing they’re interested in, they fill out an application to take over that particular lease.
  1. The buyer and seller then negotiate the specific takeover terms, including the purchase option price, responsibility for excess mileage or wear and tear fees, and any transfer fees.
  1. When the buyer and seller agree on the terms, the lease transfer paperwork is completed at the dealership, where both parties sign to finalize the takeover.
  1. The buyer takes over the monthly payments and other remaining lease responsibilities. The original lessee is released from the lease.

 

The key steps of listing the details online, having the buyer browse and apply,negotiatin g the specifics, and completing the legal transfer at the dealership make up the typical lease takeover process.

 

Benefits for Original Lessee

For the person looking to get out of their existing auto lease, a lease takeover can provide several advantages:

 

Exit Early Due to Change in Circumstances

Life situations can change during the course of a 2-3 year lease term. Perhaps you’ve lost your job or had an income reduction. Maybe you need to relocate or will be traveling frequently for an extended time. Family size and transportation needs can also evolve. With a lease takeover, the original lessee has the flexibility to exit their lease commitment early if their circumstances change in a way that makes continuing the lease difficult or impractical.

 

Avoid Extra Lease Breaking Fees

Breaking an auto lease typically involves paying expensive early termination fees to the leasing company, often several thousand dollars. With a lease takeover, the original lessee can transfer the lease to a new party and avoid these hefty lease cancellation costs.

 

Benefits for New Lessee

For the person taking over the lease, known as the new lessee, lease takeovers provide several key advantages compared to getting a brand new lease:

 

  • Shorter lease term – Takeovers allow driving a leased vehicle without the long commitment of a new 2 or 3 year lease. Ideal for those with short-term transportation needs.
  • Lower upfront costs – Avoiding large down payments and acquisition fees required for new leases. Takeovers just involve first month’s payment.
  • Try out make/model – Test drive a vehicle make and model before deciding to purchase it when the lease ends. Takeovers provide flexibility.

 

With new leases often costing thousands upfront, takeovers let new lessees get behind the wheel of a leased vehicle for a fraction of that cost. The shorter lease period also provides flexibility if circumstances change down the road.

 

Where to Find Lease Takeovers

There are a few main places to find lease takeover listings in Canada:

 

LeaseBusters

LeaseBusters pioneered the lease takeover concept in Canada back in 1989. They have the largest selection of takeover listings in the country, with thousands of vehicles listed at any given time. LeaseBusters provides an online marketplace to connect sellers and buyers directly. You can browse current listings, or set up alerts for new matches.

 

LeaseTrader

LeaseTrader is another major online lease marketplace operating in Canada. They have been around since 1999 and have a large inventory of lease transfers available. You can search by vehicle make, model, price and location to find potential matches.

 

SwapALease

SwapALease is the new kid on the block, launching their Canadian site in 2016. They have a smaller selection than LeaseBusters and LeaseTrader, but may have some unique listings not found on the larger sites.

 

Manufacturer Lease Transfer Programs

Some automakers like Ford, GM, Toyota, Honda, Nissan and others offer their own in-house lease transfer programs. This allows you to take over a lease on a used vehicle of the same brand. Inventory is limited compared to third-party sites, but may offer additional peace of mind.

 

How to Evaluate Lease Takeover Listings

Once you’ve narrowed down the lease takeover listings to a few strong options that meet your needs, the next step is carefully evaluating each one to identify the best overall deal. There are several key factors to compare across listings:

 

  • Remaining lease term – A shorter remaining term gives you more flexibility
  • Monthly payment amount – Lower is better to maximize savings
  • Mileage allowance – More remaining mileage provides more flexibility
  • Condition of vehicle – Minimal wear means lower end fees
  • Purchase option – Lower buyout gives more end of lease options

 

In addition to comparing listing details, it is highly recommended to thoroughly inspect the vehicle in person before committing to a takeover. This allows you to check for any pre-existing damage not disclosed and assess overall condition. Take the car for a test drive to feel performance and check for issues.

You should also get a CarProof vehicle history report for any listing you are serious about. This provides insight into past accidents, claims, registration history and other details that impact value and reliability.

Taking the time to thoroughly evaluate and compare lease takeovers listings helps ensure you choose the optimal deal that meets both your financial needs and desired car.

 

Takeover Considerations

Taking over someone else’s existing car lease comes with some important considerations to weigh before moving forward:

 

Pre-existing Wear and Tear

The vehicle you take over will likely have some degree of wear and tear from the original lessee’s use. It’s important to thoroughly inspect the interior and exterior condition before finalizing the takeover. Look for any dents, scratches, stained seats, or other damage. While some wear is normal, excessive damage can lead to end-of-lease fees. Be sure to document any pre-existing damage before signing.

 

Taking Over Remaining Lease Obligations

When you assume a lease, you take full legal and financial responsibility for the remaining term. This includes continuing monthly payments and returning the vehicle in acceptable condition per the original lease terms. Failure to make payments or damage beyond normal wear could negatively impact your credit and result in fees.

 

No New Car Warranty

Since you are not the original lessee, most factory warranties will have already started. This means you lose out on the comprehensive bumper-to-bumper coverage a new lease would provide. Consider an extended third-party warranty for additional protection if the factory coverage has expired.

 

Negotiating Takeover Terms

When taking over an existing lease, there may be room to negotiate certain terms to get a better deal. Two key areas to negotiate are transfer fees and mileage limits.

Many lessors charge transfer fees in the $300-$500 range to process a lease takeover. However, some sellers may be willing to cover part or all of this fee in order to facilitate the takeover. Make sure to inquire about any negotiable fees.

It’s also common for leases to have annual mileage limits, such as 20,000 km per year. If the original lessee did not drive the car much, there may be extra mileage available on the lease. You can negotiate to have any remaining mileage transferred over or added to the mileage limit, giving you more flexibility.

Additionally, you may be able to negotiate the purchase option price at lease-end if you think you may want to buy the car. See if the seller can reduce or remove any remaining lease-end fees they would have owed, lowering your purchase price.

Going into a lease takeover with the ability to negotiate terms can help you customize the deal to better suit your needs and potentially save money. Being flexible on things like fees or mileage can also make your takeover application more attractive to the seller.

 

Completing the Transfer

Once you’ve found a lease takeover listing you want to move forward with, the next step is completing the official transfer process. This final stage is critical to ensure you are protected as the new lessee. Here’s what to expect:

 

Inspecting the Vehicle Thoroughly

Before signing any paperwork or paying any fees, be sure to thoroughly inspect the vehicle. Test drive it, checking for any mechanical issues or unexpected noises. Give the interior and exterior a very close look for any damage, wear and tear, or defects beyond normal use. Take it to your trusted mechanic for a pre-purchase inspection. This step is essential to avoid liability for any pre-existing issues down the road.

 

Signing Paperwork at the Dealership

Once you are satisfied with the vehicle’s condition, you’ll head to the dealership along with the original lessee to sign all the necessary paperwork. This is when you legally assume responsibility for the lease. The original lessee will sign their release from the lease terms, while you will sign to take over the payments and obligations. Double check the mileage, remaining lease length, purchase option and all other takeover terms before signing.

 

Transferring Insurance

An important final step is to transfer the vehicle insurance into your name, since you are now the registered lessee. Cancel any existing insurance of the original lessee. You will need to arrange your own coverage for the remaining lease term. Make sure there is no gap in coverage during the transition. Not having active insurance could make you liable if anything happens to the vehicle.

 

Extra Fees to Watch For

When taking over someone else’s lease, there are often extra fees charged by the leasing company and/or dealership to process the transfer. Being aware of these additional costs can help you accurately calculate the total expense of a lease takeover.

Here are some common fees to watch out for:

 

Disposition Fee

This fee, also known as a transfer fee, is charged by the leasing company to process the paperwork when the lease obligation is transferred to a new lessee. Disposition fees typically range from $300-$500.

 

Assignment Fee

The assignment fee is similar to the disposition fee, but is charged by the dealership instead of the leasing company. Dealerships tend to charge $200-$400 for this administrative fee.

 

Documentation Fee

Documentation fees cover the costs of paperwork processing on the dealer’s end. This fee is in the range of $100-$300. Some dealers waive documentation fees to incentivize lease takeovers.

It’s important to clarify exactly what fees will be charged before finalizing a lease takeover agreement. Getting fee details in writing from the seller can prevent surprise charges at the time of transfer.

 

Alternatives to Takeovers

While lease takeovers can offer flexibility and affordability, they aren’t the only option for getting a vehicle. Here are some other ways to get behind the wheel:

 

New Lease

Taking over someone else’s existing lease means you won’t get that “new car” experience. With a brand new lease, you can get the latest model year vehicle with zero miles and select the exact color, trim, and options you want.

However, new leases require high upfront costs like first month’s payment, taxes, acquisition fees, and security deposit. The monthly payments will also be higher than a takeover of the same vehicle.

 

Used Car Purchase

Buying a used car provides ownership rather than a lease. You won’t have mileage restrictions and can keep the car as long as you want after it’s paid off.

Depending on the age and condition, a used car may require more maintenance and repairs. You also have to pay the full purchase price upfront or get an auto loan.

 

Ride Sharing

Services like Uber and Lyft let you get rides whenever needed without the costs of ownership. This can work well if you only need occasional transportation.

However, ridesharing adds up fast if used daily. You also have to rely on driver availability rather than having your own vehicle ready to go.

 

Using a Lease Takeover Specialist

With the growing popularity of lease takeovers in Canada, a number of companies have emerged to provide specialized services around finding, evaluating, and facilitating transfers. These lease takeover specialists can provide valuable guidance and assistance with the process.

One of the key benefits of using a lease takeover specialist is that they have extensive experience finding the best deals. Specialists have access to large databases of lease listings across Canada. They can quickly filter for the exact make, model, lease terms, location, and price you’re looking for. This saves you the effort of having to browse multiple listing sites yourself and weeds out the mismatches.

Takeover specialists also provide expert help inspecting vehicles and negotiating the lease takeover terms. They know what to look for during a vehicle inspection to spot any issues with excessive wear and tear. Specialists are seasoned negotiators that can often get takeover fees lowered or removed, mileage topped up, or other concessions that benefit the new lessee.

Finally, a lease takeover specialist will handle all the lease transfer paperwork and liaise with the dealership. This ensures the process goes smoothly and prevents any surprises. The specialist acts as your experienced representative during what can otherwise be a complex, stressful process if doing a takeover for the first time.

While lease takeover specialists do charge fees for their services, those costs may be well worth it for the time savings, guidance, and peace of mind provided. For those new to lease takeovers, using a specialist service can give you the confidence that you’re getting the best possible deal while avoiding any costly mistakes.

 

Conclusion

In summary, lease takeovers provide an alternative way to get into a leased vehicle for a shorter term without the high upfront costs of starting a new lease. For original lessees, it’s a flexible exit strategy if circumstances change. Takeovers let new lessees enjoy the benefits of leasing without the typical 2-3 year commitment. However, takeovers do come with some drawbacks like limited selection, existing wear and tear, and lack of warranty coverage.

Lease takeovers tend to work best for certain drivers like students, young professionals, or growing families who want a newer vehicle but can’t afford high down payments and don’t necessarily need long lease terms. Retirees who winter in warmer climates part of the year can also benefit from short term leases via takeovers. For those with changing transportation needs, takeovers provide an affordable leasing solution.

By understanding how the lease takeover process works, evaluating listings carefully, negotiating favorable terms, and inspecting vehicles thoroughly, consumers can find takeovers that fit their budget and driving needs. Working with a lease takeover specialist can further streamline the process. While not ideal for every situation, lease takeovers present a unique leasing option for the right buyer and seller.

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Questions About Lease Takeovers

Leasing a car can have advantages over buying in Canada. Leases often have lower monthly payments compared to financing a car purchase. You can drive a newer car more frequently with a lease. Leases shift the car’s depreciation risk to the lessor. You may have more flexibility to change vehicles every few years with a lease. However, leasing also has downsides – you do not own the car at the end of the lease and may have mileage restrictions or wear and tear fees. You’ll need to weigh the pros and cons of buying vs. leasing based on your own driving needs and finances.

Taking over someone’s car lease in Canada involves a few key steps:

 

  1. Search lease takeover listings on sites like LeaseBusters to find a suitable lease transfer opportunity

 

  1. Contact the seller and verify details about the car, payments, condition, etc. Arrange to test drive the vehicle.

 

  1. Have the car inspected by a trusted mechanic to check for issues.

 

  1. Meet at the dealership to finalize paperwork and transfer the lease into your name. There may be transfer fees.

 

  1. Make sure proper insurance coverage is in place before driving the newly leased vehicle.

 

Following this process helps ensure you take over a lease responsibly from start to finish.



When taking over another person’s car lease in Canada, there are a few fees to be aware of:

 

– Lease assumption/transfer fee – This is typically $300-$500 paid to the leasing company

 

– Refundable security deposit – Covers damages; same as original lease terms

 

– Sales taxes on remaining lease payments

 

– Ownership transfer fee – $50-$75 admin fee at registry office

 

– Inspection costs – If you choose to get a mechanical inspection

 

Knowing these lease takeover fees upfront helps avoid surprise charges. Always verify exact fee amounts with the seller/dealer.



You generally cannot negotiate the purchase price or monthly payments when taking over another person’s lease in Canada. The lease terms such as price, payments, and residuals are fixed. However, you may be able to negotiate:

 

– The amount of any upfront fees the seller wants for the transfer

 

– Including additional services like winter tires in the deal

 

– Getting vehicle upgrades like rustproofing or protections packages

 

While limited, understanding where you do have wiggle room helps get the best possible deal on a lease takeover.



In Canada, leased vehicles come with annual mileage allowances, typically 20,000 km per year. Going over the set mileage limit during your lease triggers per km overage charges from the leasing provider, usually $0.10-$0.25 per excess kilometer. Watching your mileage closely is key as the overage fees can add up fast. Many lease takeover listings disclose the car’s current mileage giving you insight into rate of usage.



Yes, leased vehicles in Canada are subject to normal “wear and tear” guidelines regarding the car’s condition when returned. Common high-wear items checked at lease-end include tires, brakes, glass, and paint chips. Major mechanical issues must also be repaired. Damage beyond regular use can mean repair charges assessed to the lessee. Reviewing the lease company’s wear and tear policy helps avoid surprise fees. Maintaining the car properly and fixing minor dings/scratches is important.

Taking over a leased vehicle requires having adequate auto insurance in place in Canada. Required minimum coverage generally includes:

 

– Liability coverage of $200,000

 

– Accident benefits of at least $200,000

 

– Comprehensive and collision coverage

 

– Gap insurance (covers the difference between car value and remaining lease balance if totaled)

 

Before finalizing the lease transfer, notify your insurer to switch coverage to the new leased car in your name to avoid insurance gaps. Failing to maintain required insurance violates lease terms.

Before taking over a car lease in Canada, it is wise to check if the vehicle has any outstanding liens. To check for liens:

 

– Ask the seller to provide a CARFAX Canada lien check report

 

– Enlist a registry service company to conduct a lien search on the Vehicle Identification Number (VIN)

 

– Review the lease documentation for wording about liens

 

– Contact the leasing company listed to verify lien status

 

Ensuring no undisclosed liens exist protects you from potential repossession risks after assuming lease payments.



In most provinces, you must pay sales tax on the remaining lease payments when taking over another person’s lease. The tax rate varies by province and is charged on remaining payments including the residual buyout amount if you end up purchasing the car at lease-end. The seller or dealer can clarify the exact tax costs during the lease assignment process so they do not catch you by surprise.

Yes, it is smart to get a used car inspection prior to finalizing a lease takeover. A thorough inspection by an independent mechanic checks over 150 points on the car to spot any mechanical, electrical, or other issues. Minor problems can then get addressed as part of the takeover negotiation. Major issues may help negotiate a lower price or influence your decision to walk away from the deal entirely. The $100-$150 spent is worthwhile for peace of mind.

Important questions to ask the seller when taking over their lease include:

 

– Why are you ending your lease early?

 

– What is the car’s maintenance and repair history?

 

– Are there any existing mechanical or damage issues?

 

– Is it still under the original factory warranty?

 

– Can I see a recent safety and emissions test report?

 

Asking strategic questions upfront ensures you take over a lease situation with your eyes fully open regarding that vehicle’s condition and history. This helps avoid unpleasant surprises down the road once the lease is in your name.

Good places to search for cars with leases up for takeover include:

 

– LeaseBusters.com – Canada’s largest lease takeover marketplace

 

– SwapALease.com – Database of consumer lease transfers

 

– LeaseTrader.com – Allows listing and searching lease deals

 

– Car manufacturers’ certified pre-owned lease programs

 

– AutoTrader.ca or online car classifieds

 

Using online lease takeover sites allows seeing many options for lease transfers available in your local area rather than just one dealer.

Returning an auto lease early in Canada often triggers early termination charges from the leasing provider. Typical fees if not keeping the car for the full lease term include:

 

– Early termination fee – Around $300-$500

 

– Excess mileage overage charges if applicable

 

– Excess wear and tear repair costs

 

– Disposition fee to ready car for resale

 

– Other misc. lease-end fees per your contract

 

Knowing potential early return charges allows properly weighing options if your situation changes before lease maturity.

At lease signing in Canada, the leasing contract includes the residual value or predetermined price to buy your leased car at the end of term if you choose. To estimate current buyout costs to own your leased vehicle:

 

– Check your lease paperwork for residual value

 

– Obtain a lease-end appraisal to gauge actual market value

 

– Inspect for excess wear/mileage that may alter value

 

– Ask the leasing company for a lease payoff quote

 

This allows comparison to help decide if buying your leased car is the right financial move when your term ends.

Missing a car lease payment in Canada can incur penalties and fees:

 

– Late fee around $30 plus interest

 

– Negative hit to your credit score

 

– Possible activation of early lease termination

 

Multiple missed payments may trigger the leasing company to repossess the vehicle. Keeping lease payments current is essential to avoid hassles. Communicate with the lender immediately if struggling to make payments.



You typically cannot negotiate down the predetermined residual value or buyout price stated on your auto lease in Canada. The buyout number is set in the original leasing contract based on projected future car values. However, if your car shows signs of excess wear or mileage, the leasing company may appraise its value lower than residual – giving some room to negotiate buyout costs. Incentives may also be available to lease or purchase a new car from the same brand, potentially lowering total buyout outlay.

Early lease terminations in Canada often incur fees, but returning a leased car penalty-free is possible in certain situations:

 

– Included end-of-lease options like waived termination fees from the same brand

 

– Job loss, disability, or death waiver through optional lease protection plans

 

– Military personnel auto lease termination exemptions

 

– Provisions for moving overseas or other special circumstances

 

Double check your lease contract along with contacting the leasing provider to ask about any penalty exception waivers that may enable ending your car lease early without charges or fines.



Returning a leased car in Canada with excess wear and tear beyond normal usage guidelines may mean paying repair charges assessed by the leasing company. Wear and tear fees typically apply if:

 

– Tires, brakes, glass, lights etc. need replacing

 

– Body panels exhibit dings, scratches, mismatched paint

 

– Interior shows ripped seats, damaged controls, major stains

 

– Mechanical components need overhaul like engines, transmission

 

Carefully maintaining your leased auto both cosmetically and mechanically is key to avoid surprise charges when you hand back the vehicle at lease maturity.

Leased vehicles in Canada must be returned in good overall condition at lease end – clean and damage-free mechanically and physically per your contract’s wear and tear guidelines. This typically means:

 

– No missing equipment or non-working components

 

– Electronics and features 100% functional

 

– Engine and drivetrain operating properly with fluid changes done

 

– Interior and exterior show only minor wear relative to mileage

 

– Tires, brakes, glass in serviceable condition

 

Review lease-end checklist to address any issues prior to turning in your car and avoid excess wear fees.



Common fees to expect when returning your leased vehicle in Canada include:

 

– Disposition fee: $300-$500 to ready car for resale

 

– Excess wear and tear charges if applicable

 

– Mileage overage fees if over allotted km limit

 

– Late payment penalties or interest

 

– Any unrepaired mechanical/damage issues

 

– Final lease payment

 

– Misc. administrative fees

 

Knowing typical lease-end charges helps budget and prepare to turn your car in and finalize obligations. Get any big issues fixed early to avoid large last-minute bills.

Cars being leased to another person in Canada must meet reasonable condition standards including:

 

– No major accidents – only minor body damage OK

 

– Interior/exterior show wear in line for car’s age and mileage

 

– Mechanical components like engine and transmission operate properly

 

– Electronics, features in working order – stereo, power windows etc.

 

– Tires match and have 50% or more tread life remaining

 

Ensuring lease takeovers undergo inspection protects new lessees from assuming vehicles needing significant repairs.



You typically cannot negotiate the locked-in monthly payment amount, interest rate, or lease length when assuming another person’s existing car lease in Canada. The original lessee signs a binding contract with fixed lease terms with the dealer. However, aspects open to negotiate on a lease takeover include:

 

– Amount of any upfront assignment/transfer fees

 

– Including extra services like winter tires in deal

 

– Addition of protections packages or aftermarket accessories

 

Look for value-adding incentives even within restrictive lease takeover pricing.



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