A lease buyout means you buy the car you have been leasing. Here is how the buyout price is set, the tax you pay on it, how to finance it, and how to tell whether it beats handing the car back or transferring the lease.
Quick answer: At the end of the term you pay the residual value written in your lease, plus sales tax, and the car is yours. Before the end, the leasing company quotes a payout amount instead. It is worth it when the car is worth more than the buyout price, or when you are well over your kilometres.
| When | Buyout price | Plus |
|---|---|---|
| End of the term | The residual value in your lease contract | Sales tax, and any purchase fee in the contract |
| Before the end (early buyout) | The payout amount the leasing company quotes for that date | Sales tax, and any purchase fee in the contract |
Sales tax applies to the buyout price. In Ontario that is 13% HST, so a $20,000 residual costs $22,600 before any fee. Your contract lists the residual and any purchase-option fee, so read it before you call.
Buyout makes sense when: what the car would sell for − (buyout price + tax + fees) > 0, or when the extra-kilometre and wear charges you would pay at return are larger than that gap.
It usually does not pay when the car is worth clearly less than the buyout price and you are under your kilometres. Then returning it, or transferring the lease before the end, costs less.
| Option | You pay | Best when |
|---|---|---|
| Buy out | Buyout price + sales tax | The car is worth more than that, or you are over your kilometres |
| Return | Any wear and extra-kilometre charges | You are under your kilometres and the car is in good shape |
| Transfer early | The transfer fee and any incentive you offer | You want out before the end of the term |
At the end of the term it is the residual value written in your contract. Before the end, the leasing company quotes a payout amount for that date. Sales tax and any purchase fee are added.
Yes. Sales tax applies to the buyout price. In Ontario that is 13% HST.
Yes. Many leasing companies offer refinancing, for example the Honda Financial Services Flexible refinancing program, and banks and credit unions offer lease buyout loans.
Usually. Ask the leasing company for an early payout quote. Compare it with transferring the lease, which is often cheaper if you only want out.
Last checked October 18, 2026. Refinancing example from Honda Financial Services. Tax rate as on our Ontario page.