Money factor calculator
Convert a lease money factor to APR and back, and see the monthly finance charge.
- ๐บ๐ธ US federal & state rules
Equivalent APR
6%
Money factor 0.0025 ร 2,400
- Money factor
- 0.0025
- APR
- 6%
A close equivalent using the industry 2,400 rule.
Common money factors
| 0.0008 | 1.92% APR |
|---|---|
| 0.0015 | 3.6% APR |
| 0.002 | 4.8% APR |
| 0.0025 | 6% APR |
| 0.003 | 7.2% APR |
| 0.0035 | 8.4% APR |
| 0.004 | 9.6% APR |
| 0.005 | 12% APR |
- The 2,400 rule gives a close APR equivalent, not the exact rate the leasing company files. Ask the dealer for the buy rate money factor so you can spot a markup.
Show the math
| Rule | APR = money factor ร 2,400 |
|---|
What to do next
How it works
Leases quote interest as a money factor, a small decimal like 0.00250. To compare it with a loan rate, multiply by 2,400. To go the other way, divide the APR by 2,400.
The monthly finance charge on a lease is (capitalized cost + residual value) ร money factor. Enter both amounts to see that charge in dollars.
Things to keep in mind
The 2,400 rule is an approximation that the whole auto industry uses. The exact effective rate can be slightly different, but the gap is small enough for comparing offers.
Frequently asked questions
How do I convert a money factor to APR?
Multiply the money factor by 2,400. A money factor of 0.0025 works out to about 6% APR.
Why 2,400?
The lease finance charge is (cap cost + residual) ร money factor each month, which treats the average balance as half of that sum. Multiplying by 12 months, by 2 for that average and by 100 for a percent gives 2,400.
What is a good money factor?
It depends on current rates and your credit. Compare the converted APR with what a bank would charge on a car loan; if the lease APR is much higher, the dealer may have marked it up.
Can I negotiate the money factor?
Often, yes. Lenders set a buy rate, and dealers are allowed to add a markup on top. Asking for the buy rate is a common way to lower the payment.