Because I dont believe that I have to pay any interst on a car, now if I am buying the car I undertand I do.
2007-10-18 07:43:34 · 19 answers · asked by luis_valiente1 1 in Cars & Transportation ➔ Buying & Selling
If you pay for the entire lease up front then no you don't. If you are making payments, then you have to finance the lease amount and generally there will be interest. This is exactly the same if you bought a car.
I really don't know why people have so much trouble understanding leasing. If you are going to trade in a vehicle every 3 years or quicker, then you should lease. If you are going to keep a vehicle for at least 4 years, then buy.
This will be simplified, but lets say 2 people get the exact same car, Person A buys for $25K and finances for 5 years, B leases for $10K for 3 years,both people finance the amount at the same rate, they both sell the cars after three years, person A will have paid more because he paid interest on the entire amount of the cars cost, and not just the part of the car that he used like the person that leased did.
You say the person that leased will have to pay more if he goes over his miles or if he causes damage or excessive wear and tear, but so will the person that bought... in the form of lowered resale value.
2007-10-18 08:50:01 · answer #1 · answered by Anonymous · 1⤊ 2⤋
A lease does not have an APR (interest rate).
However a lease DOES come with a 'money factor', which in essence is an interest rate. When you lease a car you are borrowing the amount between the cap cost (price you pay for the car, fees, negative equity, etc. and the residual value. And because you are borrowing this amount, the lender (lessor) charges you (the lesee) interest (a money factor).
Here is where leases get tricky. I currently lease a Tundra and got in on a great program Toyota was running. I am financing around $17,000 for 3 years and will pay only $487 in interest! At the end of the lease, I can buy the truck for a guaranteed price if I wish, and I have knocked down the principal by over half! Not a bad deal. However, standard leasing rates can vary, so do your math. Take the amount between the adjusted cap cost and the residual and divide that by the number of months in the lease. That would give you a payment without interest. Then multiply the quoted payments by the number of months on the lease and you will have the amount you repay over the term of the lease. If this amount is thousands of dollars higher than the difference between your adjusted cap cost and your residual, you are paying too much interest on a lease...
hope it helps
2007-10-18 07:57:29 · answer #2 · answered by bob_ber_down 4 · 1⤊ 3⤋
You are also paying interest on the principal each month, although lease companies generally don't call it interest when you lease.
That makes it harder for you to find out how much you're really paying. Like a conventional loan, the interest portion of each monthly payment starts out higher and declines as the principal is paid down.
Since the residual value isn't paid until the end, you can count on paying interest on that every month for the full term of the lease.
Leasing is simply another way to finance the use of a vehicle. A lease itself isn't good or bad – it's a financing tool. In a minute we'll tell you how it works, and help you decide whether this type of financing tool makes sense for you.
But first, you need to understand the simple reason the industry has single-mindedly pushed leasing over buying – bigger profits!
Leasing hasn't been pushed because it's better for the customer. It's been pushed because it has allowed dealerships and other leasing outlets to make far bigger profits on customers.
2007-10-18 07:55:35 · answer #3 · answered by Anonymous · 3⤊ 2⤋
You've gotten some good answers and some that are terrible, such as the one in which the poster stated that you don't pay interest if you pay for your lease up front. You ALWAYS pay interest on a lease. Even if you make all your payments in one lump sum up front, you still pay interest on the lease-end value of the car as part of that payment.
When you lease, the lease company or bank used their money to pay the dealer for the car you will drive. This money won't be fully repaid until you return the car at lease-end and they sell it to get the remainder of their money back. Until the time they get their money back, you will pay interest.
2007-10-18 10:25:15 · answer #4 · answered by Anonymous · 1⤊ 1⤋
Leasing presents flexibility in phrases of the choices to be had. If you desire to difference your vehicle each few years or in case your tradition needs a brand new vehicle each few years, then leasing is an gorgeous choice. So rent is extra profitable in comparison to a mortgage.
2016-09-05 14:11:14 · answer #5 · answered by ? 4 · 0⤊ 0⤋
Even if you are leasing you are paying the bank a certain amount over a certain period, there is already a predetermined amount that has to be paid. You pay interest to the bank for the amount the bank is allowing you to lease it for. I hope that makes sense to you.
2007-10-18 07:48:48 · answer #6 · answered by Anonymous · 2⤊ 0⤋
No u will not but u will have to give a huge down payment that u will not get back...In the long run, it will be cheaper to buy a car that will be urs than lease one that u will have to pay for about 36 months then give it back and still have nothing.,.,So i advise u to buy and save..And remember, u still have to qualify like if u were gonna buy it...
2007-10-18 07:49:33 · answer #7 · answered by Drea 2 · 0⤊ 2⤋
When you lease a car, the payment is like a rental payment. So, asking whether you pay interest on a lease payment doesn't even make sense.
2007-10-18 07:50:17 · answer #8 · answered by Paul in San Diego 7 · 0⤊ 2⤋
A lease comes with an interest rate and charge.
2007-10-18 07:46:18 · answer #9 · answered by wizjp 7 · 1⤊ 0⤋
you don't pay interest on the car you pay interest on the money you borrowed to get the car. when leasing you pay the cost of you using the car for a predetermined time
2007-10-18 07:48:35 · answer #10 · answered by koma 6 · 2⤊ 1⤋