I don’t understand why there is an interest rate quoted on car leases. How is leasing something different than renting something? If I get an apartment I just pay rent. So how does interest come into play.
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Leasing IS just long term renting.
There isn’t an interest rate specifically, but the cost of borrowing money (the leasing company has to buy the vehicle, and pay interest on money to buy their fleet of leased vehicles) does factor into the total lease cost. The lease payment is made up of the depreciation over lease term and money factor, which is the calculated fee for them letting you lease and includes their interest costs, administration expenses and profit for the leasing company.
Apartments also do have interest factored into the rate, as the landlord may have a mortgage on the property. They don’t break it out and just advertise a final rental price but vehicles have firm cash costs, financing rates, or lease rates. So you’d see the MSRP or negotiated cash price and then see the additional costs based on the financial choice for acquiring the vehicle.
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