When You Lease A Car Are You Still Financing?

This may seem stupid but I am a bit clueless in the leasing department.

I have never done this and I am considering it.

I went to the dealership and the sales guy said I could lease the car for $325 a month.

what I am confused about is am I still financing?

He did not give me a finance rate but I am wondering if one is hidden in that price.

Please help, especially if you have leased before.

Is leasing just a long rental agreement?

Can I negotiate anything in the terms?

Basically it is like renting the car for a certain amount of months.

I don't know about negotiating...I only had one leased car and that was about 5 years ago. The only way they told me I could lower my payment was to put more money down. I'm not very good at negotiating though.

A leased car is financed. You are financing only part of the negotiated price. It's usually a very low interest rate and depends on your credit. Since it's leased for a set amount of time say 36 months you only finance a % of the car. For example, say a car costs $20K. If you lease it you will finance probably about $11,000 of it over 36 months, that's why the payment is lower. You will also pay tax on that $11,000.

At the end of the lease, you can turn it in, or buy it out from the financing company for the remainder of the cost plus interest and tax.

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Posted by Blu-ize

A leased car is financed. You are financing only part of the negotiated price. It's usually a very low interest rate and depends on your credit. Since it's leased for a set amount of time say 36 months you only finance a % of the car. For example, say a car costs $20K. If you lease it you will finance probably about $11,000 of it over 36 months, that's why the payment is lower. You will also pay tax on that $11,000.

At the end of the lease, you can turn it in, or buy it out from the financing company for the remainder of the cost plus interest and tax.

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Blu- Can I negotiated the amount I want to finance and then get my financing somewhere else, say my credit union or do you have to do the financing through the dealership.

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Posted by dgtlsunshine

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Posted by Blu-ize

A leased car is financed. You are financing only part of the negotiated price. It's usually a very low interest rate and depends on your credit. Since it's leased for a set amount of time say 36 months you only finance a % of the car. For example, say a car costs $20K. If you lease it you will finance probably about $11,000 of it over 36 months, that's why the payment is lower. You will also pay tax on that $11,000.

At the end of the lease, you can turn it in, or buy it out from the financing company for the remainder of the cost plus interest and tax.

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Blu- Can I negotiated the amount I want to finance and then get my financing somewhere else, say my credit union or do you have to do the financing through the dealership.

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most dealerships want you to use there banks (cause they get kickbacks) but your bank you are using should have a list of dealerships they have contracts with... its harder to negotiate the amount, because it goes by the value of what the car is gonna be say 2 or 3 years from now(when you lease is up). Remember, bank still wants to make a profit when they go to sell it at the end of auction.

I have NEVER heard of a case where you can lease a car using your own bank.

These leases are done with the financial institution the dealer uses.

Usually there are deals worked out through the dealership with their financing companies or banks. I've leased through Chase and others but it's always been from the dealership.

I don't know how it would work out using your credit union.

Just a note about negotiation, the lease interest rates are silly low, like 2-3%, not like purchasing. Also negotiate the lease as you would any other car sale. Don't negotiate the monthly payment, negotiate the sale price of the car. Needless to say, never pay sticker price. In my opinion, if you negotiate the deal for invoice price or lower, you have made yourself a fair deal.