As my mind has been on getting another vehicle lately, I’ve been on the prowl for deals in the compact SUV market.  One resource that I didn’t know about until a reader mentioned it, was  I’m not affiliated with them, but I think it’s a great service for car shoppers.

Basically what they do is list leased vehicles that leasees want to get out of.  If you don’t know how car leases work, let me tell you that they are very expensive to get out of should that situation arise.  So lease busters provides a means for leased vehicles to be listed, some even with cash incentives to have the lease payments taken over.

As a frugalist who likes to pay cash for everything to avoid paying interest, leasing a vehicle didn’t cross my mind as an option.  But after seeing all the motivated lease holders offering cash incentives to get out of their lease, I had to take a closer look.

If I were to assume a car lease, I would buy out the car at the end of the term as I like to drive my cars for as long as possible.  In addition, the car would have to be late model, low kilometers, and the seller would have to take care of the lease transfer fees.  After working out the numbers on a few listings, typically the ones with cash incentives/down payments unsurprisingly work out to be the best deals.


If you’re the type to drive a car for the long term, then buying out the car at the end of the term may make sense.  To figure out the total cost of the vehicle:

(After tax lease payment x number of months remaining) + (After tax purchase option price) – (Cash incentive)

An Example

Just recently, I found a 2007 CRV (latest generation) in Ontario with 45,000 kms.  There are 21 months remaining on a $408 payment (taxes in) with an end purchase price of $16,100 (taxes in).  The seller will pay the lease transfer fees.

Even though there’s no cash incentive for this listing, the seller had a down payment on the vehicle.  Doing the math, it works out to be a total cost of: $24668 (taxes in).  If I were to buy a 2009 CRV new, it would cost about $35,000 on the road.

The question remains, is the $10k (or 28%) in savings worth it for a 2 year old vehicle with low kilometers?  It would depend on the condition of the vehicle, but to me, it’s at a pretty tempting price.

Note though that most of the listings don’t work out as nicely as my example above.  Some even work out to cost more than the same vehicle brand new, so make sure to run the numbers carefully.

Pros of Taking Over a Lease

  • If you look hard enough, you can find some really good deals.
  • Leased vehicles are generally well maintained and have low mileage because of restricted km’s.
  • Great for those who like to lease vehicles as they can be paid cash upfront for doing so and simply give the car back to the dealership at the end of the term.

Cons of Taking Over a Lease

  • Buyer is now responsible for the remainder of the lease.
  • Careful calculations need to be made as some of the listings are just plain expensive.

Final Thoughts

My car shopping adventures are taking me to all types of car purchasing options and never before would I have considered a lease.  However, if you can find the right deal with a motivated seller, it can work out quite nicely providing due diligence is completed.

Have you ever taken over a lease?


  1. willfly on August 3, 2009 at 10:41 am

    Lease is particularly attractive for self employed persons using vehicle for work, since lease amount can be deducted as a business expense.

  2. Henry on August 3, 2009 at 11:42 am

    When I was trying to get a family car, I looked over the various leases available.

    At the end, buying new made sense to me, since it was simpler and not much more expensive for reasons unknown. Most of the leases I saw did not have a downpayment or cash bonus, so that might be the difference. Also the Canadian dollar was appreciating and interest rates were higher in the past, so older models and older leases were higher in terms of Canadian dollars when they were bought or leased. Regarding to leases, it is probably the best deal if you hold on to the lease and buy the car at the end of the lease. If your cash flow is slightly tighter, leasing or financing does create more flexibility and does add additional marginal utility over cash payment.

    There seems to be some good deals out there on like this: You save 10k over 2009 RAV4 Sport AWD at MRSP. 2009 RAV4 has a stronger engine, but the saving is great if you don’t need it.

    There are other factors that you might want to consider: further appreciation of the Canadian dollar and August to September 2009 Clearance Sales. There is still huge inventory sitting in the US. Buying a car through the US makes a lot of sense if the Canadian dollar goes above parity in August or September. Buying a car in October and November would be even cheaper if the market crashed again, but I think that is unlikely since GDP Q3 numbers look like they will be positive.

  3. Frugal-Wannabe on August 3, 2009 at 12:24 pm

    This is a topic that I’ve been pondering for several years now. I’ve always been attracted to leasing a car because in my mind since cars are a depreciating asset, I want to put the least amount of my hard earned cash towards it, leaving more cash available to invest in appreciate assets. In addition, I disagree with proving a large downpayment when that money can be invested where it would grow rather than shrink. Finally, I like the idea of giving the car back after a four year term and getting a new one so I don’t have to worry about maintenance. Since I live close to my work kilometre restrictions wouldn’t be a problem.

    I looked at leasebusters several times and the trick there is finding the car you want at the rate that fits your budget. I think leasebusters is a great idea especially of the leasor had made a downpayment, the kms are low and the monthly carrying cost is within your budget. At the end of the lease I would return the car to the dealer and find another sublease or lease opportunity that wouldn’t require a downpayment, and has low monthly carrying costs.

    I should mention I dont have kids and dont drive a ton and prefer driving a mid or higher end.

    Since I haven’t needed a car but am getting near to entering the car acquiring market I’d really appreciate your thoughts on my comments. Especially the concept of putting the least amount of money towards a depreciating asset.


  4. VanX on August 3, 2009 at 12:47 pm

    The leasebusters site is very informative. People looking for a specific model may be able to get some good deals.

    It’s interesting that some are offering cash incentives. My friend wants out of his lease and asks anyone that wants the car to just take over the lease. He’s got a great interest rate and low payments, although no takers.

    This is far better than my other friend who wanted several thousands of dollars to take over her lease. That is nuts! Who in the right mind would want to pay additional money up front to lease it.

    I did enquire about it, but once all costs were factored in, it was cheaper to buy brand new! She said, “Well, at that time the cars were more expensive.” But still, does not make sense to take over her lease and pay additional money to her for the priviledge of doing so.

  5. paul s on August 3, 2009 at 12:51 pm

    Worst idea you’ve ever had. :-)
    Taking over someone’s lease is also taking over the liability of someone else’s driving habits, service standards and potential hidden accidents. You take it all, but only drive the vehicle a short time. Try taking back a vehicle off lease that’s been in ANY kind of accident/fender bender. Won’t happen.

    Why would anyone take on a lease for a vehicle if they can get a loan at a decent rate and own the car. Drive when and where you want, service how you want…and keep it as long as you want.

    Why would anyone want to go into a contract with an auto dealer?? Biggest scammers on the planet.


  6. DAvid on August 3, 2009 at 1:31 pm

    A few comments:

    A 2007 CR-V likely sold for about $30,000 + taxes (about $33,600) so your savings are about $8000.

    45,000 km is not low mileage, it is pretty much bang on the average of 20,000 per year (the car has 27 months of use). My 2007 has 22,000 km on it. The 1995 has averaged about 17,000 km/year.

    This vehicle CLEARLY does not meet the numbers you used in your New vs. Used article, else you should be able to acquire it for a bit over $19,000 (remember it is nearly 3 years old, now).

    A four year lease is an expensive lease, so buying it out is not the most cost effective way to acquire a vehicle.

    The current leaseholder has paid about $5000 per year for the car, and so will you for the rest of the lease. Buying new instead would have cost you ( $10,000 difference / age difference of the cars =) about $4000 per year ($3500 based on the 2007 price).

    The used car has 27 months less life in it than the new, so you will have to replace it that much sooner.

    Amortized costs:
    New: $35,000 / 12.25 years = $2857 / year
    Used: $24,668 / 10 years $2,466 / year
    A difference of about $32 per month.

    Plus you have the costs of moving it from Ontario (airfare, local transportation, hotel for 2 nights, gas, meals, and ferry costs). As long as this is below $3800, you will save a few pennies per month.

    Once you add these costs in, the new car would have to live one year longer than the used car to reach the break-even point, so ultimately, you’re only saving 1 year’s worth of costs. Is that really so great a savings?


    • FrugalTrader on August 3, 2009 at 2:04 pm

      DAvid, thanks for the tips. Yes you are right, I’m finding that the Honda’s and Toyotas are retaining their values exceptionally well, where as domestic car values drop like rocks!

      You’re starting to sound like my wife! She is really pushing for new, which makes a lot of sense for a Honda or Toyota (low depreciation).

  7. Ms Save Money on August 3, 2009 at 1:42 pm

    I thought about leasing a car when I was on the market looking for different car options.

    In the end – I buying a car was much more appropriate for me since I wouldn’t have to worry about the miles I put on the car. Plus I plan on driving my car for a long time.

  8. Jon on August 3, 2009 at 1:43 pm

    For a while I was looking at leases, especially on recent Toyota Tacomas, but then my pop laughed at me and simply stated “leased” = “fleeced”.

  9. Henry on August 3, 2009 at 2:21 pm

    FT: The example I used was wrong. I miscalculated something. I should try to use NPV to calculate the exact NPV of the car to make a comparison with the new 2009 RAV4.

  10. cannon_fodder on August 3, 2009 at 2:41 pm


    I studied leasebusters for years and found situations similar to what VanX wrote about. Many people wanted out of their lease but also expected others to defray the cost of the takeover because of large downpayments. When I looked at an older car vs. leasing a new car (or even leasing a used car from the dealer) it turned out that there were very few ‘deals’ at leasebusters.

    I believe that is because lessees don’t adapt the value they place on their vehicle with all of the incentives (and pressures) that dealers have.

    One advantage that taking over a lease has, in my opinion, is if you aren’t really sure that the vehicle is right for you or you have a temporary situation which doesn’t lend itself to a long term commitment with the vehicle.

    For example, my wife wanted us to get a convertible and she wanted a Pontiac Solstice. But, considering she has never driven a convertible, lived through the fact it had no back seat and almost no storage, hadn’t lived through the harsh Canadian winters driving a convertible with questionable insulation, I thought it might be better to find a lease takeover with around 12-18 months left on it.

    You are ‘throwing’ your money away when you buy/lease/finance a car but at least this way you have the option to walk away if the car really doesn’t suit you.

    In your particular case I don’t think this applies because your choice isn’t radically different nor is it an unpopular choice of vehicle.

    In case you were wondering, we didn’t go through leasebusters, we didn’t get the Solstice and we didnt’ lease. A convertible we DID get – and we love it!

    • KL on March 12, 2017 at 4:36 am

      This is correct.

      I’m looking at a 3rd vehicle to lease takeover but there are very rarely deals on leasebusters. A LOT of the sellers put 0 down, didn’t negotiate the purchase price and it’s actually easier to lease new.

      The 2 cases where I was able to get a “good” deal required negotiation and a seller that understands amortization. (your later lease payments subsidize the earlier ones).

      The one point that is nice about a lease takeover with a shorter term is that you basically get an extended test drive with THAT vehicle.


      2008 is250 – 6 month takeover – loved it => bought it
      2014 BRZ – 12 month takeover (cheap) – thought I would love it but too cramped for family, gave it back but had to stress over potential penalties
      2017…. looking at a TSX – would be a 5 month takeover. can i get over that beak

  11. RB @ RichBy30RetireBy40 on August 3, 2009 at 8:58 pm

    Don’t do a lease, it’s just a waste of money. If you must buy a new car, just pay CASH. There is another site called: leasetrader if you are interested.

    Key to the lease is to have them give you as many months of payments up front to take it over. 3 months minimum, and shoot for 6 months.

  12. Hightower on August 4, 2009 at 1:14 pm

    The biggest thing to watch out for is the fact that many people have “buried” past cars and/or debt into their new lease, which they then are trying to have someone else take over for them.

    Do you research and make sure you are not paying a penny over what you would get with a dealer.

  13. nobleea on August 4, 2009 at 2:37 pm

    I don’t see a difference in taking over a lease and then buying it out compared to buying a 2 or 3 yr old car. How do you know the 2 or 3 yr old car wasn’t leased and they just bought it out?

    I was looking for someone to take over the lease on my acura TL. No one would take it, even with a 3K cash incentive. So I bought it out and sold it privately for the same price. A smart person would have realized that leasing and then buying it out would be better in the long run than paying for it all upfront (since the total cash cost would have been the same, but time value of money and all).

    • KL on March 12, 2017 at 4:38 am

      not exactly true. once you buy it out, you’ve assumed all the potential penalties from the dealer… unless you had lease return insurance on the car.

      when i returned my lease takeover, I was sweating whether the dealership would ding me on tires, paint chips and a left mud flap that was chipped.

  14. Adam on August 4, 2009 at 6:47 pm

    I find leasing to be the happy medium between buying a used vehicle and buying a new vehicle.

    (Over 4 year term)
    New = higher payments, full warranty, most equity upon term end.
    Leased = lower payments, full warranty, no equity upon term end.
    Used = lower payments, NO warranty(reoccurring repair costs), least equity upon term end.

  15. phi on August 4, 2009 at 9:55 pm

    My dad was able to get great deals on lease takeovers, allowing him to drive more expensive Porsches and Benzs that he would never consider without a motivated leaser exchange.

  16. Jack on August 5, 2009 at 10:27 am

    I’m curious as to where you get the idea that a leased car is usually well maintained? I currently lease my car and (I know I don’t represent the majority of car lessees) but I NEVER bring my car in for maintenance. The only thing I ever get done is the occational oil change and break inspection. I don’t own the damn thing so why would I spend MY money to maintain someone else’s car? I have a warranty for the life of my lease so I just bring it in when something starts to rattle or bump and get it fixed for free. A couple of times I’ve been able to get certain “maintenance” things done for free simply because one of the parts associated with it was broken and covered by warranty. The only way I think you could be sure that a leased car was well maintained is if the lease agreement contains a free maintenance clause. I lease a GM (got it before they got rid of leasing) and I have to pay for my own maintenance. My friend leased his GM a few months later and got a deal where they pay all his maintenance (not a bad deal!). I think I would care more about maintaining my car if I owned it and intended to drive it into the ground (like my parents do with Hondas).

    So yeah, beware of that. You just might be taking over the lease of someone like me!

    • FrugalTrader on August 5, 2009 at 11:46 am

      That’s interesting Jack. I thought it was within most lease agreements that the leasee keeps the vehicle under the regular maintenance schedule. Time to reassess my conclusions!

      • KL on March 12, 2017 at 4:39 am

        completely unenforced

  17. phi on August 5, 2009 at 8:38 pm

    Hey Jack,

    I also thought that you have to follow a strict maintenance schedule. Has anyone ever bought a car out of lease and gotten a good deal? Something I talked to my dad about after seeing this topic yesterday.

  18. Betty B on August 14, 2009 at 9:57 am

    Don’t forget the loss on any car lease when compared to financing via a loan, your tax portion of the payment is calculated on sum of the cars depreciation portion and the interest portion of the monthly payment.

    In other words you are paying tax on the interest, you do not do this with a loan.

  19. used tires on August 22, 2009 at 12:00 pm

    I’ve personally never taken over a lease, for me at least, I’ve never been a big fan of leasing vehicles, with all the restrictions in place, I would much rather just purchase a new vehicle, or barely used vehicle. I always feel like I get my money’s worth when I do that instead of Leasing a vehicle.

    Till then,


  20. Donald Partridge on August 26, 2009 at 2:46 am

    Why even consider a used CRV when, with a little bargaining you can put an new Chevy Uplander on the road for less than $18, 000.00, all taxes and fees included.

  21. ChaPi on December 3, 2009 at 8:24 pm

    When making a ‘lease or buy’ decision you must look not only at financial comparisons but also at your own personal priorities — what’s important to you.

    Is having a new vehicle every two or three years with no major repair risks more important than long-term cost? Or are long term cost savings more important than lower monthly payments? Is having some ownership (in an old money pit ) in your vehicle more important than low up-front costs and no down payment? Is it important to you to pay off your vehicle and be debt-free for a while, even if it means higher monthly payments for the first few years?

  22. Leslie on January 24, 2010 at 12:34 am

    I am considering taking over a lease on a 2007 Jetta turbo, the lease has 17 months left of 365 a month payments with the buy out of $10,000.Currently has 32,000 kil on it, with 48,000 left for the 17 months of the lease. That sounds like a great deal to me but I know nothing about leases. The car is for my daughter who is in College. She graduates in 6 months.So instead of her getting a $20,000 loan, she can put the $4,000 she will get for her current car in the bank to cover the lease payments until she get a job. She will also not have to pay GST/PST until the buy out of $10,000. She does have a job lined up for Sept and will find something for the summer also. Is there anything I should be concerns about in this plan of mine.

  23. FrugalTrader on January 24, 2010 at 9:50 am

    Leslie, I would treat it as a used car purchase and make sure you do your due diligence. Has it ever been in an accident? Maintenance schedule followed?

  24. Jay on September 11, 2010 at 10:36 pm

    I’ve been looking at leasebusters for quite some time now, considering all angles to what makes for a good deal, and came up with the following analysis to perform:

    The car depreciates at a faster rate when it is new than when it is a few years into its lease. The exact amount of depreciation can be calculated using a standard decay curve. This depends on both the age of the vehicle and the mileage on it (so you have two decay constants to consider). If you take the purchase price (residual + all lease payments – borrowing costs) and the residual amount, you can calculate these decay constants.

    Once you have those numbers, then you can calculate what the exact value of the car is at the particular age and mileage, and then compare to the cost that you’d be paying if you took over the lease. Its amazing to see the difference in deals that you can find when you do this calculation on leasebusters. Some you’re losing thousands, and others you’re gaining thousands.

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