Car payments

[Jeslek]

Those of you that are leasing a car, what is the interest rate you're paying? I have a Toyota Echo and the interest rate is 1.9%.

 

[Dave]

the last time i checked into leasing, the cost for the additional mileage was prohibative. it would have cost me more to lease than to buy.

 

[PT]

Wtf? maybe I don't understand Leasing too well, as I've never done it, but how can you be paying interest on a lease? It's not yours when it's done, so what exactly are you paying interest on?

 

[Q]

This interest is expressed as a money factor, sometimes called lease factor, and is specified as a small decimal number such as .00297. (Note: dealers will sometimes confuse you by quoting money factor as a larger decimal, such as 2.97, which means .00297, because it sounds like an attractively low annual interest rate.)

Money factors can be converted to annual interest rate (APR) by multiplying by 2400 (yes, it is always 2400 and is not related to the length of the loan in months). For example, a money factor of .00297 multiplied by 2400 = 7.13%.