Do you pay an interest rate when you LEASE a car??

Question

I thought that when you lease you do NOT pay an interest rate whereas obviously you do pay that approx 7% apr when buying a car. I always thoughts it was... negotiated price minus residual value times sales tax on the difference divided by lease term... to find your lease payment. Down payment, tag, and title extra.

Answer 1

Yes you do pay interest but it works much different then financing and you can buy down your rate.  Go to this site and play aroundwith some numbers. http://www.cars.com/go/advice/financing/...

Answer 2

There is a money factor in a lease, usually represented like .00270.  It's the rent charge which is really interest.