Need to get out of your car lease early? You’re not alone.

Whether your needs have changed, you’re cutting back on expenses, or your car just doesn’t fit your lifestyle anymore, exiting a lease can feel complicated, but it doesn’t have to be. While early lease termination often comes with penalties, there are smarter, more flexible ways to break free without breaking the bank.

In this guide, we’ll walk you through the most common ways to end a lease in Canada, including lease transfers, buyouts, and alternatives like selling your leased vehicle to Clutch. We’ll break down the pros, cons, and costs of each method, so you can find the option that fits your situation best.

Let’s get started.

Your Lease Exit Options at a Glance

Option 1: Transfer Your Lease

A lease transfer, also known as a lease takeover, is when someone else assumes your lease contract and takes over the remaining payments and responsibilities. It’s one of the most cost-effective ways to get out of a lease early, especially if your monthly payment is low or your lease terms are attractive.

Here’s how it typically works:

1. You find someone to take over the lease. This can be a friend, family member, or stranger through a lease takeover platform.
2. The new person applies for credit approval through your leasing company.
3. You both sign lease transfer paperwork, and the vehicle officially changes hands.
4. Transfer fees and taxes are paid. These vary by manufacturer and province.
   

Most lease transfer processes take 1-4 weeks, depending on how quickly the new party gets approved and how responsive your leasing company is.

Tools That Help

Platforms like LeaseBusters specialize in connecting people looking to exit their lease with those looking to take one over. You’ll typically pay a fee to list your vehicle and get support with paperwork and buyer negotiation.

Pros

• Low cost: No need to pay out your lease or deal with early termination penalties.
• No credit hit: As long as the transfer is completed properly, your credit remains unaffected.
• Fast when demand is high: Leases with low monthly payments, low mileage, or desirable terms often attract quick interest.

Cons

• Transfer restrictions: Some manufacturers don’t allow transfers in the first 6–12 months of the lease or at all.
• Ongoing liability: In many leases, you may still be liable if the new lessee defaults—read your contract carefully.
• Fees apply: Transfer fees usually range from $200–$500, and in Ontario, licensing fees may also apply.

Option 2: Buy Out Your Lease and Sell the Vehicle

If you’re looking for a fast and clean break from your lease, buying out the vehicle and selling it can be a smart move, especially if your car is worth more than the remaining buyout amount. In this scenario, you pay off the lease, take ownership of the car, and then sell it to recover your costs (or even turn a profit).

You can do this on your own, or you can work with a company like Clutch to simplify the process and avoid paying the lease buyout tax in Ontario.

How It Works

1. Contact your leasing company and request a buyout quote. This will include the vehicle’s residual value and any fees.
2. Compare that buyout price to your car’s market value. If the car is worth more than the buyout, you may have equity.
3. If you want to handle it yourself, you’ll need to pay the full amount, take ownership, and resell the vehicle.
4. Alternatively, Clutch can handle the buyout for you—no need to pay upfront or manage paperwork.

Sell Your Leased Car to Clutch

Clutch offers a seamless, tax-free way to get out of your lease without the hassle of finding a buyer or paying the lease off yourself. Here’s how it works:

• Get a Firm Offer: Enter your vehicle details on the Clutch website to receive an instant, no-haggle offer.
• Send Your Lease Info: Upload your lease buyout letter, or let Clutch handle it for you.
• Clutch Handles the Rest: We pay off your lease directly, manage the paperwork, and take care of detailing, repairs, and safety certification.
• Get Paid Fast: Once we pick up the vehicle, you get paid on the spot.

This process avoids the 13% lease buyout tax in Ontario, which can save you thousands. You won’t need to pay the buyout amount upfront, and you don’t have to deal with dealerships or private buyers.

One-time fee: $999–$1,499, depending on the vehicle make.

Eligible brands include: Acura, Audi, Genesis, Honda, Hyundai, Infiniti, Kia, Mazda, Mitsubishi, Nissan, Subaru, Toyota, and Volkswagen.

Pros

• Simple, fast, and avoids lease penalties.
• No need to pay the lease buyout tax upfront.
• You can walk away with cash if your vehicle has equity.

Cons

• Requires a lease with positive equity for the best results.
• Not all brands are eligible for Clutch’s lease buyout program.

Option 3: Trade In or Lease Roll Over

If your needs have changed but you still want to keep driving, trading in your current lease for a new vehicle can be an appealing option. This process is often called a lease roll over, because any remaining costs or penalties from your current lease are rolled into your next financing or lease agreement.

This option is most common for people who need a different type of vehicle, like switching from a compact car to an SUV after starting a family, or want to take advantage of better rates or newer models.

How It Works

1. Visit a dealership and ask about trading in your leased vehicle.
2. The dealership will assess the car and determine its value versus what you still owe on the lease.
3. If the car is worth less than the lease buyout amount, the negative equity is added to your new lease or loan.
4. You drive away in a new vehicle and make combined payments that cover both the old balance and the new one.

Pros

• Quick way to switch vehicles without needing to pay off the lease outright.
• Lets you roll lease costs into a new arrangement you can afford monthly.
• Good fit if you still need a car but want something different.

Cons

• Adds debt to your new lease or loan, increasing long-term cost.
• Can become a financial trap if done repeatedly.
• May not make sense if you’re already upside-down on your current lease.

Note: While this option keeps you driving, it doesn’t always save you money. If your goal is to exit your lease entirely, consider a lease buyout or transfer instead.

Option 4: Early Lease Termination

If transferring the lease or buying out the vehicle isn’t feasible, you can choose to terminate the lease early by returning the vehicle to the leasing company and paying the associated penalties. This is one of the most expensive ways to exit a lease and should typically be considered only after exploring other options.

How It Works

1. Contact your leasing company and let them know you’d like to terminate your lease early.
2. They’ll provide a termination quote, which usually includes:
   
   • Remaining lease payments
   • Early termination fee
   • Possible negative equity (if the car’s market value is lower than the lease payoff)
   • Additional fees for wear and tear or excess mileage
3. You return the car and pay the quoted amount.

You’re not purchasing the vehicle in this case, you’re paying to walk away.

Pros

• Ends the lease quickly if you need to offload the vehicle immediately.
• Might make sense if you’re planning to stop driving entirely.

Cons

• High cost: often involves paying most or all remaining lease payments, plus fees.
• May affect your credit if you can’t cover the balance.
• You walk away with nothing—no vehicle and no resale value.

In most cases, early termination is a last resort option. If you’re facing this path, it’s worth getting a lease buyout quote and checking your vehicle’s resale value—you may be better off selling the car instead.

Option 5: Voluntary Surrender

Voluntary surrender, also known as voluntary repossession, is when you give the leased vehicle back to the leasing company because you can no longer make the payments and don’t have another way out. While this is technically a proactive step, it’s still treated as a default and carries serious financial and credit consequences.

This option should only be considered when all others, like a lease transfer, buyout, or payment relief, are no longer viable.

How It Works

1. Contact your leasing company and let them know you want to surrender the vehicle.
2. Arrange a return of the vehicle. This may involve dropping it off or having it picked up.
3. The leasing company will sell the vehicle and apply the sale proceeds to your outstanding balance.
4. You’re responsible for any shortfall between what the vehicle sells for and what you owe on the lease, including fees and penalties.

Pros

• Removes the monthly lease burden if you truly can’t afford the payments.
• May reduce the amount you owe if the vehicle still holds some value.

Cons

• Serious damage to your credit score—treated similarly to a repossession.
• You’ll likely still owe money after the vehicle is returned.
• Can stay on your credit report for years, affecting future loan or lease approvals.

Before choosing voluntary surrender, check whether you have any hardship protections, such as job loss or disability coverage, that could help you avoid default.

Option 6: Ask the Leasing Company for Help

If you’re facing temporary financial challenges but don’t want to give up your vehicle entirely, it’s worth contacting your leasing company directly. Many lenders offer support options such as payment deferrals, lease extensions, or reduced payments, especially if you’ve maintained a good payment history.

This isn’t a long-term solution, but it can give you breathing room while you explore your options.

How It Works

1. Call or email your leasing company and explain your situation clearly.
2. Ask about available hardship programs; these may include:
   
   • Payment deferrals for a few months
   • Extended lease terms to reduce monthly payments
   • Restructured payment schedules
3. Review the revised terms carefully before agreeing to anything.

Pros

• Avoids default and keeps your lease in good standing.
• No credit impact if you follow the new payment plan.
• Buys you time to sell the vehicle, transfer the lease, or improve your financial situation.

Cons

• Doesn’t eliminate your obligation; you’ll still owe the full lease amount.
• If your financial difficulties continue, you could end up in the same position later on.
• Not all leasing companies offer this type of flexibility.

This option is best suited for short-term setbacks, not permanent solutions. If your situation is unlikely to improve soon, a lease buyout or transfer may still be a better way forward.

Things to Consider Before Exiting Your Lease

Before you take steps to end your lease, it’s important to review your contract, evaluate your financial position, and understand the potential consequences of each option. A little homework upfront can help you avoid unexpected costs and might even reveal opportunities to save.

1. Review Your Lease Agreement

Check for:

• Lease transfer restrictions (e.g. minimum term before transfer is allowed)
• Buyout terms and residual value
• Early termination fees
• Mileage limits and wear-and-tear clauses

These details will help you determine which exit strategies are actually available and which will cost the least.

2. Compare Market Value vs. Buyout Amount

If you’re considering buying out your lease, compare the vehicle’s buyout cost to its current market value using tools like:

• Clutch’s Car Value Calculator
• Canadian Black Book
• CarFax Value Calculator
  
  

If your car is worth more than the buyout amount, you may be able to walk away with cash in hand by selling it.

3. Consider Tax Implications

In Ontario, buying out your lease usually comes with a 13% tax—unless you sell the vehicle to Clutch, which handles the transaction directly with the leasing company and removes that tax burden entirely.

4. Think About Your Credit Score

Some lease exit options (like early termination or voluntary surrender) can hurt your credit score. Others, like transfers or selling through a buyout, have no impact when handled properly.

5. Evaluate Your Timeline

If you’re in no rush, a lease transfer might be the cheapest route. If you need out fast and have equity, a lease buyout and sale could be the most efficient option.

What’s the Best Option for You?

The best way to get out of your lease depends on your financial situation, how quickly you want to exit, and whether you still need a vehicle.

Here’s a quick breakdown of which path makes the most sense based on common scenarios:

If your car is eligible and you want a smooth, fast exit without paying the lease off upfront or dealing with tax, selling your car to Clutch can be a smart move. We handle the buyout, manage the paperwork, and pay you the difference—no stress, no sales tax, and no hidden fees.

Get an offer on your leased vehicle