Lease quotes in the US show interest as a money factor, a small decimal like 0.0025, instead of an APR. It is easy to convert, and knowing how helps you spot a bad deal. Check any quote with the lease calculator.
Money factor to APR
APR ≈ money factor × 2,400. To go the other way, divide the APR by 2,400.
| Money factor | Equivalent APR |
|---|---|
| 0.0010 | 2.4% |
| 0.0015 | 3.6% |
| 0.0020 | 4.8% |
| 0.0025 | 6.0% |
| 0.0030 | 7.2% |
| 0.0035 | 8.4% |
How the money factor is used
The monthly finance (rent) charge = (net price + residual value) × money factor. On a car with a $31,000 net price and a $20,300 residual, a 0.0025 money factor adds $128.25 a month. A 0.0030 factor would add $153.90, about $925 more over 36 months.
Spotting a marked-up money factor
- Ask the dealer for the money factor and convert it to APR.
- Compare it with the lender’s published base rate for your credit tier, often shared on owners’ forums for each brand.
- Dealers are often allowed to add a markup; you can negotiate it down just like the price.
Frequently asked questions
Why use a money factor instead of APR?
It is a convention in lease maths: multiplying by the sum of net price and residual gives the average monthly finance charge directly.
Is a lower money factor always better?
Yes for the finance charge, but also check the negotiated price and residual value, which affect the payment more.
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