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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Home/Rent prices generally go up every year, cars generally go down in value as they age.
Car loan is paying off the car in monthly payments. It depends on the amount financed (selling price minus down payment and trade-in) and interest rate.
Car lease is renting, and paying off the depreciation (calculated by the car maker, this is non-negotiable) plus interest (sometimes called Money Factor, it’s just the interest divided by 2400). Interest is based on credit score and is to rate how good you are at paying on-time. Dealerships really don’t want to go thru the hassle of repossessing, they reward people with good credit scores with less interest.
There still is interest even for excellent credit scores for both leases and loans or else there is no incentive to just buy in cash (but then you get into economics of maybe less cars will be sold).
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