Leasing a Car in Hawaii

Drivers looking to save money on Hawaii’s high cost of living might consider leasing a car rather than buying.
Written by Mary Cahill
Reviewed by Carrie Adkins
Hawaii has the highest cost of living in the United States. Leasing a car is a good way to cut these costs, but you’ll need to negotiate certain lease terms to maximize savings.   
  • Leasing a new car in Hawaii can help cut the high cost of living, but negotiating lease terms is important for maximum savings.
  • Car leases flexibility in terms and duration of the agreement, lower monthly expenses compared to
    car loans
    , and potential savings on maintenance costs.
  • Important factors to consider when leasing a car in Hawaii include negotiable terms, capitalized cost, mileage caps, and more.

Reasons to lease a car in Hawaii

More than half of Hawaiians drive lengthy commutes in their own car each day. The average annual cost of car ownership in Hawaii is $2,547 per year. And with $890 of that cost attributed to gas, traveling in Hawaii can get expensive. 
If you are financing a car, you can anticipate these annual costs to be even higher. By deciding to lease rather than own a new vehicle, you could benefit from the following advantages. 
  • Flexibility: The average car loan lasts six years, but leasing gives you the opportunity to choose the terms and duration of the agreement. 
  • End-of-lease options: Depending on your lease options, you can either choose to buy out the vehicle at the term’s end or return it to the dealership.
  • Lower monthly cost-of-living expenses: Lease payments are typically much lower than monthly payments for a car loan. You could also save a bundle on maintenance costs—due to the short nature of most lease agreements, it’s likely that any
    vehicle repairs
    will be covered under the manufacturer’s warranty.
  • No loss on depreciation: Cars depreciate in value far quicker than any other asset. With a lease, you won’t have to pay depreciation any mind—you’ll be driving the car while it's new or gently used, and you won’t be responsible for it as it ages. 
MORE: How high is the cost of living in Hawaii?

What to look for when leasing a car in Hawaii 

If you are a first-time leaser, it’s important to know exactly how the process works before signing a lease agreement. Here’s what you’ll want to pay close attention to:
  • One of the most important things to keep in mind while shopping for a lease is that the
    terms of the agreement are negotiable
  • Like a traditional car loan, a lease agreement will involve a down payment followed by
    monthly payments
    until the lease term ends. 
  • With a leased vehicle, you aren’t paying toward ownership of the car—you’re paying for the value the car loses as you drive it.  
  • Most leases are closed-end—this means you return the vehicle at the end of your lease term. That being said, it’s very common for the dealership through which you lease the car to offer you a buy-out option at the end of the lease term. 
The more you know before going into the dealership, the easier it will be to spot any potential red flags. 

Terms to know 

1. Capitalized cost: Also called the “cap cost”, this is the amount of money that your monthly lease payments will be based on. Usually, it’s the same as the manufacturer’s suggested retail price (MSRP), but with fees added for:
Negotiating a lower cap cost will lower your monthly payments. 
2. Money factor: The interest you’ll pay on your lease, is known as the money factor—or rent charge. Financial experts suggest that the money factor should fall around 0.0023, which translates to a rate of 5.5%, if not lower.
A dealership offering you a money factor higher than 5.5% may not be offering you the best deal. 
3. Mileage cap: You should expect the dealership to put a limit in the lease agreement on how many miles you can drive every year. Exceeding the mileage cap will result in having to pay extra fees. 
4. Excess wear: The dealership or lender will expect your leased vehicle to show signs of use, but excess wear beyond that expected over two to three years of driving will cost you.

Red flags to watch out for 

Be cautious of a car dealer that:
  • Suggests you sign the lease on your first visit 
  • Focuses only on discussing monthly payments without negotiating cap cost or money factor 
  • Adds on a bunch of extra fees and expenses in your cap cost
Don’t rush into a lease agreement or sacrifice a chance to negotiate the terms. All the terms should be put in writing before you sign anything.

How much should I expect to pay?

Based on data from
, the average monthly payment for a lease at the end of 2020 was $460. Since Hawaii’s cost of living is so high, it’s a good idea to keep your total car expenses at 20% of your monthly income—or lower. 
Bottom line: To make sure you get a great deal, keep your eyes open for lease specials, and don’t be afraid to negotiate all your terms.
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Leasing can be a good option for those who are looking to lower their overall car expenses. If owning a vehicle is important to you, financing a car or buying one outright may prove more satisfying.

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