About this calculator
The money factor calculator can help you calculate the equivalent annual interest rate of a vehicle lease.
What is Money factor?
The money factor, which is also referred to as the lease factor or lease fee is a fractional figure that is applied in the automotive leasing sector to ascertain the charges in finance that the lessee will pay within the lease term.
The money factor is in decimal form unlike an interest rate that is quoted in percentages. It will be the price of borrowing the money of the lessor and it is one of the essential factors in determining the monthly lease payments to do in a vehicle. Lesseees are required to have a basic understanding of the money factor because it will directly affect the overall cost of the lease.
A low money factor, for example, 0.00150, when converted to APR, equals 3.6% (0.00150 × 2,400). This represents a favorable, low money factor — meaning cheaper financing for the lease. Conversely, a higher money factor, such as 0.00375, converts to an APR of 9.0% (0.00375 × 2,400), which indicates a costlier lease deal.