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## How is money factor calculated on a lease?

You can use the lease charge to calculate the money factor with this formula: Money Factor = Lease Charge / (Capitalized Cost * Residual Value) * Lease Term. Once you have the money factor, you can multiply it by 2,400 to convert it to an interest rate.

How do you convert a lease rate to interest rate factor?

Lease Money Factor Unlike an APR, it’s not a percentage, but you can convert it to something comparable by multiplying by 2,400. For example, if the money factor on a lease is 0.002, you would multiply it by 2,400 to get an equivalent APR of 4.8 percent.

### What is a money factor rate?

The money factor is the financing charge a person will pay on a lease. It is similar to the interest rate paid on a loan, and it is also based on a customer’s credit score. It is commonly depicted as a very small decimal. Multiplying the money factor by 2,400 will give the equivalent annual percentage rate (APR).

How do you calculate interest rate with money factor?

To find the equivalent interest rate for a money factor, multiply the factor by 2,400. For example, if the money factor is 0.00271, the math gives an interest rate of 6.5 percent. You can also go from an interest rate to a money factor by dividing the rate by the same 2,400.

#### Is lease money factor negotiable?

Some dealers may say the rent charge — also known as the money factor — isn’t negotiable. Other dealers may mark up the rent charge to improve profit. The key is making sure this number is reasonable based on current interest rates and what other dealers are offering.

How do you calculate lease money factor and residual?

Take the adjusted capitalized cost and add it to the residual. Multiply that amount by the money factor. The resulting number will be the amount of interest charged per month….Walk Through a Sample Lease.

Step
3. Equals the residual value = \$13,110
4. Negotiated selling price of car \$21,000
5. Add in fees + \$1,200

## Is the money factor on a lease negotiable?

The Money Factor is just a simple calculation derived from the interest rate. As discussed in the “Shopping for your Lease” section, money factors are set by the lending institutions and are not easily negotiated.

What is money factor vs APR?

The Difference Between and APR and a Money Factor APRs are used for loans, whereas money factors are used for leases. Both represent the financing or interest on your payments, but are expressed in different ways.

### What is the best money factor on a lease?

Leasing experts agree that the most important factor in a lease is the vehicle’s residual value, which is a prediction of what it will be worth at the end of the lease term.

What is a good money factor in a lease?

A decent money factor for a lessee with great credit is typically around 3% to 5%. If you have fantastic credit and you’re offered a lease with a money factor higher than . 0025 (or 6% APR) then it may be worth your time to shop around.

#### Why is 2400 used in money factor?

2400 is the product of 3 consecutive conversion (1/2 * 1/12 * 1/100) to convert from an interest rate to a money factor. 6/2400 = Money factor of 0.0025 which can be multiplied against the total amount being borrowed to know what the monthly interest would roughly equal.

How do you calculate a lease money factor?

money factor is calculated by taking the actual bank interest rate of the loan and dividing it by 2400, resulting in a decimal based number. For example a car lease with an 7% loan has a money factor of .0029.

## How do you calculate the money factor on a car lease?

The Money Factor is basically the interest rate you are leasing the car for. money factor is calculated by taking the actual bank interest rate of the loan and dividing it by 2400, resulting in a decimal based number.

What is the money factor in leasing?

The money factor is a method for determining the financing charges on a lease with monthly payments. The money factor can be translated into the more common annual percentage rate (APR) by multiplying the money factor by 2,400. Money factor is also known as a “lease factor” or a “lease fee.”.

### What is a monthly lease rate factor?

The lease rate factor, also known as the money factor, is a component of the interest rate used to determine loan payments. It’s a different way of showing the amount of interest the lessee must pay on a lease with monthly payments. The lease rate factor is easy to convert to the more common annual percentage rate.