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Returning a Leased Car Early In Canada

Returning a Leased Car Early In Canada

Being stuck in a car lease you want to get out of can be an extremely frustrating situation. Perhaps you’re tired of driving the same vehicle after a couple years or your life circumstances changed and you need something different. Or maybe you just found a great deal on a new car but are midway through your current lease. Whatever the reason, you’re not alone – many lessees face a situation where they want or need to terminate their auto lease agreement early.

Breaking a car lease in Canada typically involves financial penalties, but is possible under certain conditions. This guide will walk through your options if you’re looking to return your leased vehicle ahead of schedule, along with tips to minimize associated fees and costs. We’ll also bust some common myths about early lease termination and outline what to expect if you decide to go down this route.

While getting out of a car lease agreement before it ends isn’t always easy or cheap, being informed and strategic can help make an early exit more seamless. Read on for everything you need to know about returning your leased car early in Canada so you can make the best decision for your situation.

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What Happens When You Return a Lease Early

Returning your leased vehicle before the end of your contract term typically comes with financial consequences. Here’s what to expect if you need to break your car lease agreement early:


Early Termination Fees

The most common penalty for early lease termination is an early termination or early buyout fee. This is essentially a charge for breaking your contractual obligations before they are fulfilled. Termination fees can range anywhere from a few hundred to a few thousand dollars, depending on your lease agreement and how early you are returning the vehicle.


Owing Remaining Payments

In addition to termination fees, you will also be responsible for any remaining monthly payments left on the lease. So if you have 9 months left on your 3 year lease, you would need to pay the termination fee plus those remaining 9 monthly payments.


Excess Wear and Mileage

Most leases have limits on mileage and vehicle condition, with excess fees if you go over those limits. When returning a lease early, the lessor will still inspect for excess wear and tear or mileage. Any applicable fees for being over the limits would be added to your early termination costs.


Potential Credit Score Impacts

Breaking a lease agreement early could also negatively affect your credit score. It would count as breaking a contract and your lessor would likely report it to the credit bureaus. This could lower your score for some time after lease termination. However, as long as you pay all fees and remaining payments owed, the damage should be relatively minor.


Lease Buyout Option

One way to end your lease early is to buy the vehicle outright, which officially terminates your lease obligations. This can be a useful option if your car has gained equity through appreciation in value. To go this route, you’ll need to pay off all your remaining lease payments plus the predetermined purchase option price stated in your contract.

When a car is worth more than the residual value estimated at the beginning of the lease, it has positive equity. In this case, buying out the lease may cost you less than turning it in and paying early termination fees. Run some calculations to see if the buyout price is lower than the car’s current market value. This equity could make purchasing the vehicle worthwhile.

Buying out the lease also avoids disposition fees and excess wear charges assessed when turning in a leased vehicle. Since you’ll own the car after purchase, you can sell or trade it in to capture its equity. Just be sure to factor in sales costs when determining your potential savings.

If your buyout price exceeds the car’s value, purchasing it to end your lease obligations usually won’t make financial sense. You may want to explore other options in this situation. But if buying the car is cheaper than early termination fees, it can be a viable exit strategy from your lease.


Lease Takeover

One option for ending your car lease early is to do a lease takeover. This involves transferring the remainder of your lease obligations to another driver who will assume the lease. With a lease takeover, you find someone willing to take over your existing lease contract and payments.

To find someone interested in assuming your lease, you’ll need to advertise your lease terms online or through classified ads. Key details to include are the make/model of the vehicle, lease payment amounts, mileage restrictions, and time remaining on the lease. Platforms like LeaseBusters allow you to easily list your lease takeover terms.

The main benefit of a lease takeover is that it typically allows you to exit your obligations early with little to no fees. As long as you find someone to assume the lease, you can hand over the keys and walk away without termination penalties. The new lessee takes over payments and becomes responsible for the vehicle.

That said, it can take some time and effort to find the right person to take over your lease. You may need to offer incentives for someone to assume your obligations. It’s important to continue making payments until the lease is officially transferred to avoid late fees or damage to your credit. But with some work, a lease takeover can be one of the most affordable ways to return a leased car early in Canada if you want out of your agreement.


Lease Pull-Ahead Programs

Lease pull-ahead programs allow you to turn in your current leased vehicle early to start a new lease ahead of schedule. Essentially, you can swap your existing leased car for a new one before the contract term is up. Automakers offer these special deals as incentives periodically to encourage customers to lease another vehicle from their brand.

Pull-ahead lease programs let you terminate your current contract early, often without an early termination fee. You simply turn in the leased car and roll any remaining payments or fees into the new lease contract. It’s a convenient way to get a new vehicle while avoiding penalties for ending your current lease early.

The availability and exact terms of pull-ahead lease deals vary between automakers and regions. OEMs usually advertise when special pull-ahead offers are available. So if you’re interested in getting out of your current lease early, keep an eye out for promotions from your vehicle brand and local dealers.

The main catch with pull-ahead lease programs is that you must lease another car from the same brand. The incentive is to keep you as a repeat customer. So you need to decide if you want to commit to leasing again from that automaker versus switching brands or purchasing a vehicle.

Pull-ahead lease deals provide another option for breaking a car lease early without extra fees. As long as you’re willing to lease again with the same manufacturer, it can be an affordable exit strategy.


How to Minimize Penalties When Returning a Lease Early

While ending your car lease agreement early typically comes with fees, there are some things you can do to reduce the financial impact:


  • Review your contract thoroughly – Make sure you understand all the charges and penalties outlined for early termination. This includes things like remaining monthly payments, excess mileage fees, wear and tear assessments, and any specified early termination fees.
  • Keep mileage low – Avoid going over your allotted mileage as much as possible in the time leading up to your early return. Excess mileage fees can add hundreds or thousands to your penalties.
  • Maintain good condition – Similarly, take extra care to keep the vehicle in good shape inside and out. Repair any dents, scratches or interior wear to avoid excessive wear and tear charges.
  • Negotiate with the dealer/leasing company – There may be some flexibility in the penalties and fees assessed. Politely discuss your situation and see if they can reduce the early termination charges or waive certain fees.
  • Consider lease extensions – Some lessors may allow short-term lease extensions of 1-6 months at minimal cost. This reduces the total early termination period.


Taking these steps to mitigate penalties can help reduce the financial impact of ending your lease agreement early. While you’ll likely still owe substantial charges, careful preparation and negotiation may save you hundreds or more.


The Bottom Line

While breaking a car lease agreement early typically incurs fees, being informed on your contract terms, minimizing penalties before return, and exploring special lease pull-ahead deals can help make it more affordable. Consider all options to find the best one for your situation.



Are you regretting signing that multi-year car lease? It’s not uncommon for circumstances to change during a lease term, leaving you wanting to get out of the agreement early. While you can’t simply cancel a car lease without penalty, there are some options to consider if you need to return your leased vehicle ahead of schedule in Canada.

Breaking a car lease contract before the term is up typically involves paying fees. However, by understanding the costs, negotiating with your leasing company, and looking into special lease programs, it may be possible to terminate early and minimize penalties. This guide will walk through the key things to know if you’re asking “can I return my leased car early in Canada?”

We’ll outline the termination fees and process, go over alternatives like lease takeovers and pull-ahead programs, and provide tips to end your obligations affordably. While getting out of a lease agreement before maturity isn’t always easy or cheap, being informed on your choices can help you pick the best path forward.



Getting out of a car lease early in Canada can be costly, but is possible under certain conditions. By understanding associated fees, negotiating with your lessor, and looking into special lease programs, you may be able to terminate more affordably. Carefully weigh the pros and cons of your choices to pick the best option for ending your obligations.

The lease buyout option allows you to purchase the vehicle and end the lease, but requires having the funds to cover the remaining payments and purchase price. While it gives you full ownership, it is one of the most expensive choices.

Doing a lease takeover by finding someone to assume your lease terms can be low cost, but takes time and effort to find the right person. There’s also some risk if that person defaults on payments.

Lease pull-ahead programs offered directly through some automakers allow early termination to start a new lease. But these deals vary in availability and restrictions.

Before returning the vehicle early, aim to minimize penalties by keeping mileage and wear low. Also try negotiating the early termination fee with your leasing company.

Overall, assess your exact situation and financial capability to determine if you can buyout the lease, transfer obligations, or qualify for any lease pull-ahead offers. Then proceed with the option that best fits your needs and budget.

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Questions About Returning a Car Lease Early

**Yes, you can return your leased car early in Canada, but there will likely be fees involved.** Most Canadian lease agreements allow you to terminate your lease early by returning the vehicle to the dealership. However, you will typically need to pay an early termination fee, which covers the remaining monthly payments owed on the lease plus an additional penalty fee. The specific fees will depend on your lease agreement.


Additionally, the vehicle will need to go through an inspection and you may be responsible for extra wear and tear or mileage charges if you drove over the allotted amount in your contract. It’s important to carefully review your lease agreement so you understand the costs associated with early termination before turning in the vehicle.

**Early lease termination penalties in Canada often include the remaining monthly payments owed on the lease plus an extra fee, usually a few hundred dollars.** For example, if you have 6 months left on your lease and owe $300 per month, you may need to pay $1,800 (the $1,500 owed plus a $300 penalty) to terminate the lease.


The exact penalty amount should be outlined in your lease contract. Other possible penalties include:


– Excess mileage charges if you drove over the mileage limit

– Repair or cleaning fees for excess wear and tear

– Disposition fees and other administrative costs


So before terminating early, add up all expected penalties and costs to ensure it makes financial sense.

**Yes, you can trade in your leased vehicle early in Canada.** However, trading in a leased vehicle works differently than trading in a vehicle you own. With a leased car, you do not have any equity in the vehicle. So if you trade it in early, you will still need to pay termination fees and penalties to the leasing company in order to satisfy your contract.


The dealership acquiring the leased trade-in will typically pay off the early termination costs for you directly to the leasing company. But this amount gets added to the price of the new vehicle you are leasing or purchasing. So ultimately, you still pay those early termination costs one way or another.

Here are some of the best options for ending a car lease early in Canada:


**Lease Takeover:** You can transfer the lease to someone else who takes over your monthly payments. This avoids termination fees but can be difficult to arrange.


**Lease Buyout:** You purchase the vehicle outright at the residual value specified in your lease contract. This avoids fees but requires having enough cash to buy the car.


**Lease Pull-Ahead Program:** Some dealers offer special programs to trade in your leased vehicle early for lease credit on a new vehicle. This eliminates most fees.


**Sublease:** You rent out the vehicle to another driver who covers your lease payments. This isn’t offered by all leasing companies but lets you exit the lease without extra costs if arranged properly.


**Early Termination:** Simply return the car and pay all lease break fees. This is the easiest option but most expensive way to end a car lease early in Canada.

If you decide to return your leased vehicle early in Canada, here are some common fees you can expect to pay:


– **Remaining Monthly Payments:** You will owe all monthly payments left on the lease contract.


– **Early Termination Fee:** An extra fee is usually charged for terminating early, typically a few hundred dollars.


– **Excess Wear and Tear:** Any vehicle damage beyond normal use defined in your lease will mean additional charges.


– **Mileage Overage Fees:** If you drove over the mileage limit, extra per-kilometer charges will apply.


– **Disposition Fee:** An administrative fee for processing the early return, similar to a lease termination fee.


– **Outstanding Tickets or Tolls:** You are responsible for any unpaid tickets or tolls on the vehicle.


So be sure to budget for these costs if opting to return your leased car early. Reviewing your contract will give you an exact estimate of what early termination entails financially.

Terminating your auto lease early in Canada involves a few key steps:


  1. Review your lease contract and note any clauses about early termination. This will spell out the costs involved with ending your lease ahead of schedule.


  1. Contact your leasing company and inform them you wish to voluntarily terminate the lease. Ask them to provide full details on the fees and process.


  1. Undergo a vehicle inspection to identify any excess wear and tear or mechanical issues. You may need to pay for repairs.


  1. Make sure to remove all personal items and data from the vehicle before returning it.


  1. Return the car to the originating dealership on the early termination date. Provide payment for any applicable fees and outstanding balances.


  1. The leasing company will officially close out your lease account once all conditions have been met satisfactorily per your contract.


Be prepared to pay all due amounts either on the spot or within a short time frame after returning the leased vehicle.

**A lease pull ahead program offered by some Canadian dealerships lets you trade in your leased vehicle early to have remaining payments waived on a new lease or purchase.** Essentially, the dealer provides special lease credits to pull your next lease ahead and help eliminate early termination fees.


To qualify, you typically need to lease another vehicle through the same brand’s dealership. So if you are currently leasing a Honda, you would need to lease or buy another new Honda vehicle to participate in their pull ahead program. You may also need to have several remaining payments left on the lease at the time of trade in.


Pull ahead programs allow you to avoid most penalties, excess wear, and outstanding payment fees associated with early lease termination. Just be aware that credits are applied to the acquisition of your next vehicle, so you must commit to a new long-term purchase or lease to benefit.

Here are some top tips for negotiating early termination of your auto lease in Canada:


– Maintain excellent records like mileage logs and maintenance reports to dispute any excessive wear claims.


– Research the current market value of your vehicle and use it to counter excessive disposition fees.


– Ask for a lease loyalty discount or waiver of the early termination fee when leasing another vehicle through the same brand.


– Transfer any aftermarket parts you installed that increase the vehicle’s value, so you avoid related removal fees.


– Bundle multiple vehicles from your household to negotiate bigger cost savings from the same dealer.


– Time your request to align with annual sales goals or quotas, when dealers are most motivated to negotiate lease termination.


– Politely escalate your case to supervisors if frontline staff will not budge on fee waivers or reductions.


Approaching negotiations constructively and armed with documentation that supports your position will help in achieving the best possible outcome.

Missing car lease payments in Canada can lead to serious financial consequences:


– Late fees will accrue, usually around $30 per missed installment.


– The leasing company can place delinquent notices on your credit bureau file, damaging your credit score.


– They may install GPS tracking devices to locate and repossess the vehicle after a certain number of missed payments.


– The leasing company can remotely disable your vehicle so it will not start until payments are caught up.


– You may receive calls from collection agencies demanding overdue payment amounts.


– A legal judgement could result in wage garnishment to recover amounts owed on the lease.


To avoid such outcomes, communicate immediately with your leasing company if you anticipate missing payments to discuss hardship assistance or early termination options in Canada. Acting quickly is key to minimizing negative impacts.

If you want to take over another person’s car lease in Canada, here is the best process:


  1. Get written consent from the current lessee and coordinate having them contact the leasing company for approval to assign the lease.


  1. Submit a formal credit application so the leasing company can evaluate your qualifications to take over the lease.


  1. Have the vehicle inspected to ensure you understand the condition you are assuming responsibility for.


  1. Review all terms of the existing lease contract and ensure you comply with insurance and licensing conditions.


  1. Complete transfer paperwork with the leasing company to formally assign the agreement to you.


  1. Pay any applicable transfer fees and make arrangements to catch up on any overdue lease payments.


Following this process helps ensure a smooth transition of the auto lease to you as the new party responsible for fulfilling its terms.

When returning your leased vehicle early in Canada, make sure to have these documents handy:


– Your vehicle lease agreement – This spells out the early termination clauses you will need to review.


– Proof of insurance – Required to operate the vehicle legally on public roads up until the return date.


– Up-to-date maintenance and repair records – This documents any work you had performed to satisfy lease requirements.


– Mileage log – To compare against mileage limits for excess usage fees.


– Inspection checklist or report – Details condition of vehicle at turn-in to assess excess wear.


– Means of final payment – Most leasing companies cannot process a lease termination without settlement of outstanding balances. This requires credit card, debit card, certified cheque, bank draft, or cash on hand.


Having all documentation in order makes for an organized lease termination process and will help resolve any questions or issues faster.

The smoothest way to take over a friend or family member’s car lease in Canada is to be added as a co-lessee on the existing lease agreement. Here is a typical process:


  1. The current lessee contacts the leasing company to request adding you as a co-lessee, which they must approve.


  1. You’ll need to complete an application so they can assess your creditworthiness for assuming lease obligations.


  1. If approved, the leasing company will draw up paperwork to add your name alongside the current lessee on the lease documentation.


  1. Make arrangements between yourselves to transfer monthly payments and usage responsibilities.


As an authorized co-lessee, you become equally responsible for meeting leasing terms. This avoids fees associated with transfers to non-family members. Just ensure ongoing communication about lease details.

**Yes, in most cases you can lease another new car right away after terminating your existing auto lease early in Canada.** However, a few things to note:


– You may need to wait 1-2 weeks for the leasing company to process the return and formally close out your previous lease.


– Having an open auto loan or lease at the same time is rarely permitted. So talk to dealers right away but wait until your other lease officially closes before signing a new agreement.


– Returning a lease early can negatively impact your credit score for a period of time, which could limit options for a new lease approval and rates.


– Special lease pull-ahead programs allow you to transition directly into another lease with the same brand more smoothly.


So while you can lease again right away, a brief transition period is recommended when terminating a lease early in Canada.

Here are some top tips for negotiating the purchase of your leased vehicle at lease maturity in Canada:


– Start negotiating at least 2-3 months before your lease expires when you have maximum leverage.


– Research the current market value for your vehicle model so you can target a realistic sale price.


– Get quotes from other dealerships to use as bargaining leverage with your leasing provider.


– Point out any special features, accessories, or upgrades you had installed that increase the vehicle’s worth.


– Keep thorough maintenance records to showcase if you took excellent care of the vehicle.


– Ask about manufacturer incentives or special finance rates to make the purchase more affordable.


– Request a discount on fees and waivers for minor wear-and-tear issues identified on inspection.


– Have your financing pre-approved for extra negotiating power on the purchase price.


Knowing your position as an informed buyer will help you negotiate the best possible deal when purchasing your leased vehicle in Canada.

When purchasing your leased vehicle at the end of your agreement in Canada, here are some common fees to expect:


– **Administrative or documentation fee:** Typically $300-$500 to process the lease buyout paperwork.


– **Provincial sales taxes:** You must pay applicable federal and provincial sales taxes on the negotiated vehicle purchase price.


– **Registration costs:** This covers transferring the title and license plates into your name as the new owner.


– **Mechanical inspection fee:** If an inspection is required before sale, you may have to pay $100-$150.


– **Excess wear and use charges:** Any unrepaired dents, scratches or over-mileage accrued will mean additional fees.


Knowing these costs up front helps avoid surprise charges when buying out your leased vehicle. Be sure to negotiate waivers for any minor fees within reason.

**Yes, it is possible to negotiate the residual buyout price when purchasing your leased vehicle in Canada.** Your lease contract lists the predetermined residual value or estimated wholesale price of the vehicle at lease end. But this can deviate from true market value at the time of purchase.


If market prices have dropped, then negotiating below the stated residual price benefits you. If used car prices have surged, the leasing company may insist on a higher amount closer to fair market value. Doing research on current pricing for your make, model, and mileage gives you data to support negotiating up or down accordingly.


While buyout prices tend to be fairly fixed, it does not hurt to politely request discounts, especially if you are leasing another vehicle through the same brand. Just ensure you have solid reasoning for your asking price during negotiations.

If you modified your leased vehicle before needing to terminate the contract early, here are some tips for removal:


– Review your lease agreement for clauses on modifications and restoration obligations before terminating.


– Determine which alterations need removal to avoid associated fees. Cosmetic changes must typically be reversed.


– Obtain written estimates for removal costs beforehand so you can budget appropriately.


– Schedule uninstallation service ahead of the return date, leaving a buffer for potential complications.


– Specify in writing which modifications were dealer-installed (if any) to avoid responsibility for reversing those.


– Document the vehicle condition before and after modifications are removed.


– Keep all removed parts to facilitate reinstallation if required by the leasing company upon inspection.


Thorough planning, documentation, and using experienced professionals will streamline removing aftermarket upgrades from an early terminated lease.

If you drove over the mileage allowance in your lease agreement, you can expect excess mileage fees when returning the car early in Canada. Here is an overview:


– Lease contracts specify a maximum mileage, typically 20,000 km per year of the lease term.


– When you return the car, the odometer reading is checked against this mileage limit.


– Most leasing companies charge $0.10-$0.25 for every extra kilometer if you exceed the cap.


– Other fees for excess wear-and-tear may apply if high mileage contributed to the vehicle condition deteriorating quicker.


To estimate potential charges, subtract your car’s mileage cap from the current odometer reading and multiply the difference by the overage rate shown in your lease documentation. Avoid surprises by understanding mileage repercussions before early lease termination.

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