The money-factor formula
A factor of 0.00125 converts to 3.00%.
To go backward, divide the APR percentage by 2,400. The result is an
APR-equivalent used to make the lease rate easier to understand; a
lease rent charge does not behave exactly like declining-balance loan
interest.
Quick money factor conversion chart
| Money factor | APR-equivalent |
|---|---|
| 0.00050 | 1.20% |
| 0.00100 | 2.40% |
| 0.00125 | 3.00% |
| 0.00150 | 3.60% |
| 0.00208 | 4.99% |
| 0.00250 | 6.00% |
| 0.00300 | 7.20% |
| 0.00375 | 9.00% |
How money factor changes the payment
The monthly rent charge is calculated by adding the adjusted cap cost and residual value, then multiplying that sum by the money factor. A tiny-looking increase can therefore cost meaningful money across the entire lease. The optional section above calculates that amount using your actual worksheet geometry.
If the lessor offers refundable security deposits that reduce the factor, use the multiple security deposit calculator with the exact program reduction to measure the savings and cash held.
How to check for a marked-up money factor
- Ask which bank or captive lender is funding the lease.
- Ask for the lender's current buy-rate money factor for your credit tier and exact vehicle program.
- Compare that buy rate with the factor printed on your worksheet.
- Enter both rates above to see the monthly and total difference.
A dealership should be allowed to earn a reasonable profit for its work. The useful question is whether the rate compensation is disclosed, understandable, and acceptable as part of the total deal—not whether every dollar of margin can be removed.
Frequently asked questions
How do I convert a lease money factor to APR?
Multiply the money factor by 2,400 to get its approximate APR-equivalent percentage. For example, 0.00125 × 2,400 = 3.00%.
How do I convert APR to a money factor?
Divide the APR percentage by 2,400. A 6.00% APR-equivalent rate corresponds to a money factor of 0.002500.
Can a dealer mark up the money factor?
Depending on the lender and program, a dealer may quote a factor above the lender buy rate. Ask for both figures in writing. A reasonable disclosed profit is different from an unexplained or excessive markup.
Where is the money factor on a lease worksheet?
It may be labeled money factor, lease factor, rent factor, or lease rate. If it is not shown, ask the dealer for the money factor and the lender buy rate before signing.
Sources and limitations
The Consumer Financial Protection Bureau uses the ×2,400 conversion in its January 2025 report to the Department of Transportation. The Federal Trade Commission advises consumers to compare written offers, review the total cost rather than only the payment, and inspect lease charges before signing.