1. What is Money Factor?

The Money Factor (MF) is a decimal number used in leasing to determine the finance charges. It's essentially the lease equivalent of an interest rate, but expressed differently. Understanding how to convert between Money Factor and Interest Rate helps consumers compare lease offers with traditional loans.

2. Conversion Formulas

The calculator uses these simple conversion formulas:

Where:

• Interest Rate — Annual percentage rate (APR)
• Money Factor — Lease finance charge expressed as decimal
• 2400 — Conversion factor (combines months and percentage conversion)

3. Importance of Conversion

Details: Converting between Money Factor and Interest Rate allows consumers to compare lease offers with loan options and understand the true cost of leasing.

4. Using the Calculator

Tips: Enter either the Interest Rate or Money Factor (not both) and click Calculate. The calculator will automatically compute the corresponding value.

5. Frequently Asked Questions (FAQ)

Q1: Why is 2400 used in the conversion?
A: 2400 combines two conversions: multiplying by 100 (to convert decimal to percentage) and by 24 (to convert monthly rate to annual).

Q2: What is a good Money Factor?
A: A good MF depends on credit. Excellent credit might get 0.0010 (2.4% APR), while average might be 0.0025 (6% APR).

Q3: Can Money Factor be negotiated?
A: Yes, though dealers may call it "buy rate." Those with good credit can often negotiate lower Money Factors.

Q4: Why do leases use Money Factor instead of APR?
A: It's an industry standard that makes lease calculations simpler, though it can obscure the true interest cost.

Q5: How does Money Factor affect monthly payments?
A: Higher Money Factor directly increases the finance portion of your lease payment. A difference of 0.001 can add $20-$40/month to a typical car lease.