Money Factor Calculator
Convert between money factor and APR to see the real cost of your car lease
How Money Factor Calculator Works
When you lease a car, dealerships quote something called a 'money factor' instead of a traditional interest rate. This tiny decimal number (like 0.00250) represents the financing cost of your lease, but it's hard to compare to other loan rates you might know.
This calculator instantly converts between money factor and Annual Percentage Rate (APR), so you can understand exactly what you're paying. The conversion uses a standard multiplier of 2,400 because lease interest is calculated on the average balance over the lease term, not the full amount.
Whether you're shopping for a lease, negotiating terms, or just want to understand your current lease better, converting to a familiar APR percentage makes it much easier to compare costs and make informed decisions.
Money Factor Calculator Formula Breakdown
Formula
To convert money factor to APR: APR = Money Factor × 2,400
To convert APR to money factor: Money Factor = APR ÷ 2,400Variables Explained
- Money FactorA small decimal number (typically between 0.00100 and 0.00400) used by car dealerships to calculate the interest portion of your lease payment. You'll find this on your lease paperwork or can ask your dealer directly. Lower numbers mean lower interest costs.
- Annual Percentage Rate (APR)The yearly interest rate expressed as a percentage, which is the format most people are familiar with from loans and credit cards. This makes it easier to compare lease costs to other financing options.
Example Calculation
Given:
- Annual Percentage Rate (APR): 6.00%
Calculation:
Money factor = APR ÷ 2,400
Money factor = 6.00 ÷ 2,400
Money factor = 0.00250Result:
0.00250Explanation
This example shows a moderate lease rate. If a dealer quoted you a money factor of 0.00250, you'd know it equals a 6% APR, which you can easily compare to other financing options.
Tips for Using Money Factor Calculator
- 💡Money factors below 0.00200 (4.8% APR) are considered good deals, while anything above 0.00300 (7.2% APR) is getting expensive for most credit scores.
- 💡Always ask for the 'buy rate' or base money factor - dealers can mark this up significantly, so knowing the lowest rate helps you negotiate.
- 💡Your credit score heavily influences the money factor you're offered, just like with traditional loans, so check your credit before lease shopping.
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