1. What is Money Factor?

The Money Factor is a decimal number that represents the financing cost of a lease, similar to an interest rate in a loan. It's commonly used in vehicle leasing to calculate the finance charge portion of your monthly lease payment.

2. How Does the Calculator Work?

The calculator uses the Money Factor formula:

Where:

• APR — Annual Percentage Rate (as a percentage)
• 2400 — Conversion factor (combines conversion from percentage to decimal and annual to monthly)

Explanation: The formula converts the annual percentage rate (APR) into a monthly decimal equivalent used in lease calculations.

3. Importance of Money Factor

Details: Understanding the Money Factor helps consumers compare lease offers and understand the true cost of leasing. A lower Money Factor means lower financing costs.

4. Using the Calculator

Tips: Enter the APR percentage (without the % sign). The calculator will convert it to the Money Factor decimal used in lease calculations.

5. Frequently Asked Questions (FAQ)

Q1: How is Money Factor different from APR?
A: Money Factor is the lease equivalent of APR, expressed as a decimal rather than a percentage. It represents the monthly finance charge.

Q2: What is a good Money Factor?
A: A good Money Factor varies but is typically between 0.0010 and 0.0040 (equivalent to 2.4% to 9.6% APR). Lower is better.

Q3: Why divide by 2400?
A: 2400 combines converting percentage to decimal (÷100) and annual rate to monthly rate (÷24). 2400 = 100 × 24.

Q4: Can I convert Money Factor back to APR?
A: Yes, multiply the Money Factor by 2400 to get the equivalent APR percentage.

Q5: Is Money Factor negotiable?
A: Yes, just like interest rates on loans, Money Factors can often be negotiated with the dealer or leasing company.