Money Factor Calculator

With this money factor calculator, you can calculate the equivalent annual interest rate of your vehicle lease or vice versa. Simply enter one value to get the other instantly.

How to Use This Calculator?

Simply input either the interest rate or the money factor, and the corresponding field will automatically update. You can use this tool to better understand your lease's interest costs and compare it to other financing options.

Formula Behind Money Factor and Interest Rate

The formula to convert interest rate to money factor is simple:

Money Factor = Interest Rate / 2400

Conversely, to convert money factor back to the interest rate:

Interest Rate = Money Factor * 2400

What is a Money Factor?

A money factor is used to represent the interest rate on a vehicle lease. It is typically a small decimal number, and you can convert it to the more familiar annual interest rate by multiplying it by 2400. This is important for leaseholders who want to understand the interest component of their lease payments and make better financial decisions.

Why is Understanding Money Factor Important?

Understanding the money factor allows you to compare the cost of leasing a car versus buying it with a traditional loan. It helps you determine if the interest you are paying on the lease is reasonable. By converting the money factor to an annual interest rate, you can better assess your total cost and make informed decisions.

Example of Using the Money Factor Calculator

Let’s say you are leasing a car with the following terms:

  • Interest Rate: 4.8%
  • Money Factor: (Unknown)

By entering 4.8% into the "Interest Rate" field, the calculator will automatically show a Money Factor of:

4.8% ÷ 2400 = 0.002

If you only know the money factor, you can enter it to get the equivalent annual interest rate. For instance, if you input a money factor of 0.002, the interest rate field will display:

0.002 × 2400 = 4.8%

This is useful for comparing vehicle leases from different dealerships to see which one offers a better rate.

FAQs About Money Factor and Vehicle Leases

Q: What is a good money factor for a car lease?

A: A good money factor typically ranges between 0.00125 and 0.0025, which equates to an interest rate between 3% and 6%. The lower the money factor, the lower your lease cost.

Q: Can the money factor change during a lease?

A: No, once you sign the lease agreement, the money factor remains fixed for the entire term of the lease.