When purchasing a vehicle, the characteristics of its engine, appearance, and appointments may be very appealing, but the money factor (i.e., its cost) may be prohibitive.
A money factor is a reflection of the interest rate used in lease payment calculations (also called the "lease factor.") Money Factor is a method of expressing an interest rate that is calculated by dividing the percentage interest rate by 2400 (regardless of the length of the loan). For example, 7.2% interest expressed as a money factor is 0.003.
This figure is used to calculate the portion of the monthly payment that goes toward paying interest. It is expressed as a very small number derived from the interest rate. Multiply by 24 to convert it to a regular interest rate. For example, a money factor of .0040 equals a 9.6% rate.
A fraction that is used by many lessors to calculate the Rent Charge associated with a lease payment. This is the interest portion associated with a lease; although, it is not an annual percentage rate like that would be found on a retail installment loan contract.
a value which leasing companies use to calculate the interest portion of your payment
The anticipated cost of the lessor's loan to acquire the personal property to be leased. This cost is built into the capitalized cost.
This is a dealer term to describe the interest rate on a lease. This factor is never listed as an interest rate, like 5.76%. It will appear as a decimal digit like .00240. The way to calculate the money factor to an interest rate is to multiply the money factor by 2,400.
A number that dealers use to arrive at the interest charge for your monthly payment. Unfortunately, the number looks nothing like an interest percentage. It will be something like ".00375." For many leases, the general rule is that 2,400 multiplied by the money factor is the interest rate. Working this equation out, we see that a money factor of .00375 gives us about a 9 percent interest rate. However, not all lease companies use the same conversion factor to convert the money factor to an interest rate.
The ìinterest rateî used by a leasing company. To convert it to an annual percentage rate, multiply it by 2400. This conversion factor is the same regardless of term or leasing company. For example a money factor of .0042 corresponds to an annual interest rate of 10.08%. The money factor should be comparable to the annual percentage rate of an auto loan.
A number, often given as a decimal, used by some lessors to determine the rent charge portion of your monthly payment. This number is not a lease rate and cannot be converted to a lease rate by moving the decimal point.
A leasing term that expresses the cost of borrowing. It is similar to the interest rate paid on a conventional vehicle loan, but is expressed as a difficult-to-understand fraction. To convert the money factor to a recognizable interest rate, multiply it by 24. For example, a money factor of .00345 x 24 = 9 percent interest. The money factor is negotiable, and consumers who lease a new vehicle should look for a money factor close to the current interest rate charged for new-vehicle loans.
A number often used by lessors to calculate the average monthly rent charge portion of the lease payment.
A fractional number, such as 0.0042, used to calculate a lease fee Read more
Used in the leasing industry to mean interest rate.
The number in a lease agreement that represents the interest rate, calculated by dividing the percentage rate by 24.
The most common way to express the base interest rate of a lease is as a money factor. If you multiply a money factor by 24 (or 2400, depending on how the money factor is expressed), the result will be equivalent to the base interest rate. The money factor of most leases is known by a dealer's sales staff. The money factor is the cost of money, just as the interest rate. However, money factors are used almost exclusively in leases, whereas interest rates are used everywhere else.
Also called a lease factor or even a lease fee, this is the interest rate you are being charged. It is expressed as a multiplier that can be used to calculate your monthly payments. For example, 7.2 percent interest, when expressed as a money factor, is .0033. To convert a money factor to an interest rate, multiply by 2,400. To convert an interest rate to a money factor, divide by 2,400. (Always use 2,400 regardless of the length of the loan.)
The fraction that is used by a leasing company to calculate the interest charges on a lease. The corresponding annual interest rate can be determined by multiplying the money factor by 2400.
This is a number used to calculate the base interest rate of a lease. To arrive at a base interest rate, leasing companies will multiply a money factor by 2400. The money factor of a lease is known by the leasing and sales consultant at the dealership and is used to calculate the cost of money in the same fashion as an interest rate does. The lower the money factor, the lower the monthly lease payments.
A leasing industry term that is synonymous with interest rate
A small fraction which is used by some lessors to calculate the average monthly rent charges.
A percentage representing the cost of the money required to lease a vehicle, similar to the interest rate paid on a loan.
A fractional number, such as .0042, used to calculate a lease fee or charge. The monthly payment combines the resulting fee with the depreciation fee or charge. The money factor is not an interest rate; it is based on a formula that lessors devise to determine their profit. Consumers should look for a lower number. While lessors are not required by the Consumer Leasing Act to disclose the money factor, you still can insist on knowing it before entering a lease. You can get a rough equivalent of an annual percentage rate if you multiply the money factor by 2,400; this calculation will be slightly above the equivalent APR that the money factor represents. If a dealer quotes you a money factor such as 3.1, which sounds like a low APR, you can multiply that by 2.4 in order to get the equivalent APR. In this case, the rate would be akin to a 7.44 percent APR.
In auto leasing, money factor is the interest charge. For no particular reason except to confuse consumers, it's expressed in auto leases as a tiny fraction rather than the familiar percentage. To convert it to a true interest rate, multiply it by 24.