Convert between a lease money factor and the equivalent annual percentage rate (APR), using the conventional divisor of 2400.
Input Data
Results
At a glance:The money factor is the lease equivalent of an interest rate; APR is the annual percentage rate. They convert via the factor 2400.
Formula
aprPercent = moneyFactor × 2400
moneyFactor = aprPercent / 2400
$$MoneyFactor = \\dfrac{APR\\%}{2400}$$$$APR\\% = MoneyFactor \\times 2400$$How to Use
- Select the conversion direction (to factor or to APR).
- Enter the known value (annual rate or money factor).
- Read the converted result.
FAQ
What is a lease money factor?
It is the leasing industry's way of expressing the financing cost, shown as a small decimal (e.g. 0.00125). Multiply it by 2400 to convert it into the APR everyone understands, which makes it easy to compare the cost of a lease against a loan.
Why divide by 2400?
Because lease interest is roughly charged monthly on the average balance (about half the total). Restoring that monthly rate to an annual rate means multiplying by 24, then by 100 to express it as a percentage — 24 × 100 = 2400. Hence APR% = money factor × 2400.
Is a lower money factor always better?
Yes — a lower money factor means lower financing cost. For example 0.00125 is about 3% APR (cheap), while 0.004 is about 9.6% APR (expensive). But the total lease cost also depends on depreciation, fees and tax.
Why do lessors use a money factor instead of just stating the APR?
It is mostly a mix of industry convention and a lack of transparency. The money factor grew out of how lessors compute monthly lease interest (on roughly half the balance), and the decimal is convenient internally. Practically, a number like 0.00250 looks far less alarming than '6% APR' and is harder for a consumer to compare with a bank loan — so your best protection is to multiply any money factor by 2400 and convert it into the APR you know, which exposes whether it is a bargain or overpriced.
Besides the money factor, what else should I compare in a lease?
Focusing only on the money factor is risky because it covers just the interest. Also weigh the depreciation charge (driven by the negotiated cap cost and the residual value), upfront fees (down payment, acquisition fee, registration), mileage limits and excess-wear penalties, early-termination charges, tax and insurance, and the end-of-lease options. Estimate the total cost across the whole term and convert the money factor to APR before comparing contracts — a slightly higher rate with sensible residuals and no hidden fees can beat aultra-low-rate deal full of restrictions.
References
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.