The Blaugrana struck an agreement this week after intense negotiations that have been going on behind the scenes for several weeks between the two sides.
Despite having a buy-out clause of €20m, Barça have agreed to pay one installment of €4.75m now, the same amount in the summer and a third lot in December.
Marca believe that the €14.25m deal was struck after Racing began to look around for potential buyers in the January transfer window for the highly-rated central defender.
Frank Rijkaard already has four central defenders at his disposal, but it is believed that one if not more could leave at the end of the current season with Lilian Thuram the first to go.
Garay has also attracted interest from the Premier League with Liverpool's and Tottenham's Spanish coaches said to be well aware of his talent.
The 21-year-old defender has impressed during his time with Racing after he moved to the club from Newell's in 2005 and last season won his first international call-up to the Argentina squad.
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