The Money Factor

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What is the money factor?

The Money Factor

How does that factor in?! The money factor on a new car lease is the percentage used by lenders to calculate the rental fee portion of your monthly payment. It is not the same as your lease rate. A lease payment includes a variety of components, including:

• Depreciation
• A rental fee (and possibly other fees)
• Taxes

You can convert the money factor, which is normally expressed as a decimal (for example, 0.00249) to APR by multiplying by 2400. A good rule of thumb is that the money factor, when converted to APR, should be lower than or equal to new-car loan rates.

*For more information on lease terms and concepts, visit Leaseguide.com or the Federal Reserve Board's online consumer lease term glossary.

   

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