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Auto Lease | What does it mean?

Auto Leasing Vs. Buying: What is the difference? 

Leasing a car allows you to drive a new vehicle for less per month than if you purchased the car with a standard loan, but you will not own the car when the lease ends unless your lease contract gives you the option to purchase the vehicle.

Deciding whether to get an auto lease or to buy a vehicle is often a tough call. On the one hand, buying involves higher monthly costs, but you own your vehicle. On the other, a lease has lower monthly payments and lets you drive a vehicle that may be more expensive than you could afford to buy. Ask yourself some honest questions… What situation is more affordable to you?

A lease is a way to “borrow” a vehicle instead of buying a new or used car. It typically comes with a three-year or four-year contract and an in-depth agreement, so there are many factors to consider before signing off on this long-term commitment.

Lease Pros And Cons


  • When you lease a car, you’re paying to drive a new vehicle — not to own it.
  • Leasing usually costs you more than an equivalent loan because you’re paying for the car during the time when it is most rapidly depreciating.
  • You may be stuck with paying monthly payments for a long time. With owning, once the loan is paid, the vehicle is yours- without a montly payment.
  • Lease contracts specify a limited number of miles. If you go over that limit, you’ll have to pay an excess mileage penalty.
  • If you don’t maintain the vehicle in good condition, you’ll have to pay excess wear-and-tear charges when you turn it in.
  • If you do not like the car or if you can’t afford the payments and want to end the contract early, you will need to pay an early termination fee and penalties — and they’ll all be due at once.
  • You still have to pay for maintenance of the vehicle like tires and oil changes.
  • There may be a fee at the end of the lease.


  • You drive the car during its most trouble-free years.
  • You’re always driving a latest-model vehicle that’s usually covered by the manufacturer’s new-car warranty.
  • The lease may even include free oil changes and other scheduled maintenance.
  • You vehicle that you may not be able to afford purchasing.
  • There could be tax advantages for business owners.

What If I Want to Buy a Vehicle?

If you decide to purchase a vehicle, you will either need to apply for a loan or use cash to make your purchase. Typically, your monthly payment may be higher than leasing. You can sell or trade in the vehicle when you want to purchase a new one at any time (although we suggest paying off the loan on the vehicle before purchasing another vehicle so you do not fall into the negative equity trap). Additionally, you assume the risk of depreciation to your vehicle in regards to what it will be worth when you decide to sell or trade it in. You can drive as many miles as you want. A typical auto loan term is 5 to 6 years. You own the vehicle and get to keep it at the end of the financing term. If you are interested in purchasing a vehicle, visit us at any location or apply for a loan.

What is an Auto Lease?

Monthly payments may be lower than purchasing a vehicle. Overall, the car payments you make include the depreciation cost of the vehicle, an additional rent or usage charge, and other fees. If you end the lease early, you may be responsible for early termination charges. These fees can be very expensive. You will not be able to simply return the vehicle and stop making payments.

You can either turn the vehicle in and pay any end-of-lease fees at the end of your lease term. Additionally, you have the option to purchase the vehicle if your lease includes a purchase option. For most leases, the company or person leasing the vehicle to you assumes the risk of depreciation. Also, most leased vehicles include mileage restrictions of 10,000-15,000 miles per year. When the lease is completed, most leases also include fees for excessive mileage as well as for wear and tear. Typically, a lease is 2-4 years. Overall, If you decide to lease, you can and should negotiate the lease terms. You can compare different lease offers with the goal of negotiating terms such as the Cost of the Vehicle, Amount of any Down Payment, Rent Charge, Mileage Limits, and Purchase Options.

Heads up on Auto Leases!

Some dealers lease older, used vehicles. Usually, these dealerships lease to individuals with bad credit. Features of this type of lease shortened pay periods, high rent charges, and no repair or maintenance coverage. Unfortunately, if the vehicle breaks down, you may be responsible for repairs. Before leasing any vehicle, determine if you will be able to afford the payments in the future and if this is the right deal for you. You should also ask if the vehicle will be equipped with a starter interrupt device that will shut down the ignition if you miss a lease payment.

Expert Tip

For more information concerning how an auto lease works, visit CFPB Consumer Laws & Regulations.  Consumer Financial Protection Bureau (CFPB) is a U.S. government agency that makes sure banks, lenders, and other financial companies treat you fairly.




If you need to borrow money, we can help you. If you’re still not sure whether a loan is a right option for you, call us at 808.73.PHFCU (737.4328) or visit one of our locations on Oahu (Waipio, Waianae, Ewa Beach, Honolulu,  Airport,  and Pearl Harbor). Our team is ready to look at your financial situation and recommend the best option for you. You can also apply online to get started…



It helps to understand how a car loan is calculated and how car payments work. Before you head to the dealership, please take a moment to decide what monthly car payment you can afford. First, you need to consider your budget. Most importantly, look at your situation and be realistic and honest. Car payments and the auto loan you receive should be affordable and doable.





We can help you buy whatever auto you’re after no matter your needs or budget with a Pearl Hawaii Vehicle Loan. Also, we have pre-approval options so you’ll be ready at the dealership with funding. Afterward, get your perfect vehicle and affordable car payments. You find the new or used auto of your choice, and we’ll provide the financing. From truckscars, and motorcycles, if you need to refinance a high interest loan, buyout your lease, or need a cash back auto loan  – we can help.

If you need to borrow money, we can help you. If you’re still not sure whether a loan is a right option for you, call us at 808.73.PHFCU (737.4328) or visit one of our locations on Oahu (Waipio, Waianae, Ewa Beach, Honolulu,  Airport,  and Pearl Harbor). Our team is ready to look at your financial situation and recommend the best option for you. You can also apply online to get started…


Upgrade you.

Building trust, nurturing dreams, inspiring hope. From home or car loans to Hawaii’s most innovative banking services, Pearl Hawaii is committed to you. Bank at any of our Oahu locations in Waipahu, Ewa Beach, Waianae, Honolulu, Pearl Harbor, or near the Airport. Additionally, you can bank using PHFCUOnline just like one of our branches. To contact us, call us at 808.737.4328, toll-free at 800.987.5583, or email us at