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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A car is a depreciating asset. You’re not just paying for the right to use something, you’re actually buying the amount of car value that won’t exist anymore at the end of the lease.
Let’s say the new car is worth 30k and they expect the car to be worth 10k at the end. What you’re actually doing is giving someone a 10k car in three years in exchange for a 30k car today. The difference you need to pay for isn’t only money but also time. Interest is the exchange rate between money and time.
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