Lease Money Factor vs Loan APR
Dealers quote **money factor** (e.g. 0.00125) instead of APR. Multiply by 2400 for an approximate APR equivalent—then compare to a purchase loan on the same car price and term.
Step by step
1. Convert money factor
APR ≈ money factor × 2400 (rule of thumb).
2. Add fees
Acquisition, disposition, and doc fees are not in the factor.
3. Model residual
High residual lowers payment but raises buyout later.
Money factor vs APR
Lease math hides tax-on-payment in monthly quote—compare total outlay.
- Money factor: Lease finance charge; paired with residual and cap cost.
- Loan APR: Amortizing purchase; builds equity if value holds.
Use our calculators
Common mistakes
- Negotiating payment only
- Ignoring capitalized cost add-ons
FAQ
Is 0.001 money factor good?
Roughly 2.4% APR equivalent—verify with full lease worksheet.