Car dealers quote lease financing as a money factor – a small decimal like 0.00250 – which hides the fact that it equals a 6% interest rate. Multiplying by 2,400 makes it easy to compare with loan rates.
How to use the Money Factor Calculator
- Money factor
- Net capitalized cost
- Residual value
- Every result field is editable: type into Equivalent APR and Money factor plus every other field update to match.
Results update as you type, and every field accepts the units shown in its menu.
How it works
Enter the money factor (or type an APR into the result), and optionally the capitalized cost and residual value.
Tips
- Use the nominal annual rate and pick the compounding frequency your bank or broker states.
- Small differences in return or fees compound into large differences over decades.
- Run the calculation with a cautious, a central and an optimistic return to see the range of outcomes.
- Past returns do not guarantee future returns – nothing here is investment advice.
Common mistakes to avoid
- Comparing an APR with an APY or effective rate.
- Ignoring inflation, taxes and fees when judging a real return.
- Entering a percentage as a decimal (5 instead of 0.05 is correct here).
Inputs explained
| Field | What to enter |
|---|---|
| Money factor | A number |
| Net capitalized cost | Amount in your currency |
| Residual value | Amount in your currency |
What each result means
- Equivalent APR = [Money factor]×2400
- Monthly finance charge = ([Net capitalized cost] + [Residual value])×[Money factor]
Example values
How the main result changes when Money factor changes and everything else stays at the example values above:
| Money factor | Equivalent APR (%) |
|---|---|
| 0.0013 | 3 |
| 0.0019 | 4.5 |
| 0.0025 | 6 |
| 0.0031 | 7.5 |
| 0.0038 | 9 |
| 0.005 | 12 |
Formula
APR = money factor × 2,400Money factor = APR ÷ 2,400Monthly finance charge = (net capitalized cost + residual value) × money factorWorked example
Inputs — Money factor: 0.0025; Net capitalized cost: $30,000; Residual value: $18,000.
Results — Equivalent APR = 6 %; Monthly finance charge = $120.00.
Frequently asked questions
How do I convert money factor to APR?
Multiply by 2,400: 0.00250 × 2,400 = 6%.
Can I negotiate the money factor?
Yes – dealers often mark it up above the bank's buy rate.
Why 2,400?
It converts the lease's average-balance finance charge into an annual percentage.
What formula does the Money Factor Calculator use?
APR = money factor × 2,400.