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Comment by mmcconnell1618 | Hacker News Reader

I've noticed that car commercials in the US never show the price of the vehicle anymore. They just show a low monthly payment amount. Often, it is a lease payment which is even worse because you're renting the vehicle at a very high effective interest rate that doesn't need to be disclosed because you're not technically borrowing money. US regulations don't currently require disclosure of interest rates and fees on vehicle leases.

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> anymore

Not really a new thing. Ads and dealers have played the "low low monthly payment with zero down" (or whatever) forever.

It's even worse in the Detroit area. Pretty much every domestic automaker (and Nissan, I think) show payment amounts with employee discounts.

How can there be an explicit interest rate if there is no loan? You’re borrowing the car, not the money.

The effective interest rate is the difference in the actual depreciation of the vehicle and what your buy out price is at the end of the lease. The dealer has the ability to set the price at the end so they can manipulate how much over true depreciation you're spending.

You can do the math and convert it as a loan equivalent. If you get a loan for a car, you're paying the value of the vehicle + an extra fee for the convenience of not having the full amount upfront to purchase it. When you lease a car, you're doing the exact same thing. The only difference is that the car company is not legally obligated to disclose your effective interest rate. You can calculate it yourself here:

https://www.calculator.net/lease-calculator.html?ctype=fixpa...

A $20,000 car leased over three years for $400 a month that depreciates to $10,000 at the end of the term has an effective interest rate of 9.539%

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