Money factor calculator
A money factor of 0.00215 is a 5.16% APR: multiply by 2,400. Dealers often write it as 2.15.
How the calculator works
In the US lease formula the rent charge each month is (capitalized cost + residual) × money factor. That equals the average of the two amounts times a monthly interest rate, APR ÷ 12 ÷ 100 — so the money factor is APR ÷ 2,400.
In the dealer-quote mode the calculator takes the pre-tax monthly payment, subtracts the depreciation part ((capitalized cost − residual) ÷ months), and divides what is left by (capitalized cost + residual) to recover the money factor.
Calculated by AutoCalca with the same engine that runs the calculator above and the worked example below.
Worked example
The calculator above opens on this case: Dealer quotes a money factor of 0.00215.
What goes in
- I have
- A money factor
- Money factor
- 0.00215
What comes out
- APR
- 5.16%
- Money factor
- 0.00215
- Money factor as dealers write it
- 2.15
The catch in this case: A money factor of 0.00215 (written 2.15 on some quotes) is 5.16% APR. Multiply by 2,400 to compare it with a loan rate.
What to know in the US
Dealers and leasing companies quote the money factor, not an APR, and US lease disclosures under Regulation M do not require an interest rate. The money factor is set by the leasing company for each credit tier; dealers can sometimes mark it up, so it is worth asking for the “buy rate”.
The money factor applies to the average of the capitalized cost and the residual, which is why the rent charge on a lease can look small next to a loan’s interest while the rate is similar.
Questions people ask
How do I convert a money factor to APR?
Multiply it by 2,400. A money factor of 0.00200 equals 4.8 % APR.
Why do some quotes show a money factor like 2.15?
Some dealers write the money factor multiplied by 1,000. Divide by 1,000 to get the usual decimal, then multiply by 2,400 for the APR.
Can I find the money factor from my lease payment?
Yes. Choose the dealer-quote mode and enter the payment, the capitalized cost, the residual and the term; the calculator solves for the money factor.
Sources
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