Money Factor Calculator
This tool calculates the Money Factor equivalent of an Annual Percentage Rate (APR), or vice versa. The Money Factor is commonly used in auto leasing to represent the interest rate.
Enter either the Annual Percentage Rate (APR %) or the Money Factor. The calculator will determine the other value.
Enter Value (Either APR or Money Factor)
Understanding the Money Factor & Formulas
What is the Money Factor?
The Money Factor, also known as the Lease Factor or Lease Rate, is a term used in auto leasing to express the interest rate or financing cost. It's essentially a way of representing the Annual Percentage Rate (APR) but scaled down by a specific number.
The Relationship to APR (The 2400 Rule)
The standard conversion factor used in the U.S. market is 2400. This means the Money Factor is the APR (as a decimal, though often entered as a percentage in calculators and then converted) divided by 2400.
The core relationship formulas are:
- To find Money Factor from APR:
Money Factor = (APR % / 100) / 12 * 12 = (APR % / 100) / 2400 * 2400- Wait, that's not right. Let's fix the math explanation. The *correct* relationship is APR (as a decimal) = Money Factor * 2400. So if you enter APR as a percentage, you first divide by 100.Money Factor = (APR as a Percentage) / 2400 - To find APR from Money Factor:
APR (as a Percentage) = Money Factor * 2400
Think of dividing the APR percentage by 2400 as converting the annual rate to a monthly rate (APR/12, then dividing by 100 to get a decimal) and then doing something else... No, the simplest explanation is just the direct conversion:
Money Factor = (APR as a Decimal) / 12<- This is what the money factor *effectively* represents, a monthly rate, but it's derived from APR% / 2400. Let's stick to the 2400 rule as the direct calculation.- **Simplified Formulas for Calculation:**
- To get Money Factor from APR % entered by user:
Money Factor = (APR Input %) / 2400 - To get APR % from Money Factor entered by user:
APR Output % = Money Factor Input * 2400
These simplified formulas are what the calculator uses, treating the APR input/output as a percentage value.
Why is the Money Factor Used?
Historically, using a Money Factor made manual lease payment calculations simpler before computers were common. While less necessary today, it remains a standard term in the auto leasing industry.
Money Factor Examples
Click on an example to see the calculation:
Example 1: Convert 5% APR to Money Factor
Scenario: You are quoted an APR of 5% on a lease.
1. Known Value: APR (%) = 5
2. Formula: Money Factor = APR % / 2400
3. Calculation: Money Factor = 5 / 2400
4. Result: Money Factor ≈ 0.002083
Conclusion: A 5% APR is approximately equivalent to a Money Factor of 0.002083.
Example 2: Convert 3.5% APR to Money Factor
Scenario: The dealership offers you a 3.5% APR.
1. Known Value: APR (%) = 3.5
2. Formula: Money Factor = APR % / 2400
3. Calculation: Money Factor = 3.5 / 2400
4. Result: Money Factor ≈ 0.001458
Conclusion: A 3.5% APR corresponds to a Money Factor of about 0.001458.
Example 3: Convert 7% APR to Money Factor
Scenario: You see a lease advertised with 7% APR.
1. Known Value: APR (%) = 7
2. Formula: Money Factor = APR % / 2400
3. Calculation: Money Factor = 7 / 2400
4. Result: Money Factor ≈ 0.002917
Conclusion: A 7% APR is equivalent to a Money Factor of approximately 0.002917.
Example 4: Convert 0.9% APR (Promotional Rate) to Money Factor
Scenario: A manufacturer offers a special rate of 0.9% APR.
1. Known Value: APR (%) = 0.9
2. Formula: Money Factor = APR % / 2400
3. Calculation: Money Factor = 0.9 / 2400
4. Result: Money Factor ≈ 0.000375
Conclusion: A very low 0.9% APR translates to a Money Factor of about 0.000375.
Example 5: Convert 6.25% APR to Money Factor
Scenario: Your lease contract shows an APR of 6.25%.
1. Known Value: APR (%) = 6.25
2. Formula: Money Factor = APR % / 2400
3. Calculation: Money Factor = 6.25 / 2400
4. Result: Money Factor ≈ 0.002604
Conclusion: A 6.25% APR is equal to a Money Factor of approximately 0.002604.
Example 6: Convert Money Factor 0.001041 to APR
Scenario: A lease quote lists the Money Factor as 0.001041.
1. Known Value: Money Factor = 0.001041
2. Formula: APR (%) = Money Factor * 2400
3. Calculation: APR (%) = 0.001041 * 2400
4. Result: APR (%) ≈ 2.4984
Conclusion: A Money Factor of 0.001041 is roughly equivalent to a 2.5% APR.
Example 7: Convert Money Factor 0.003333 to APR
Scenario: You are given a Money Factor of 0.003333.
1. Known Value: Money Factor = 0.003333
2. Formula: APR (%) = Money Factor * 2400
3. Calculation: APR (%) = 0.003333 * 2400
4. Result: APR (%) ≈ 7.9992
Conclusion: A Money Factor of 0.003333 corresponds to an APR of about 8%.
Example 8: Convert Money Factor 0.0025 to APR
Scenario: A lease shows a Money Factor of 0.0025.
1. Known Value: Money Factor = 0.0025
2. Formula: APR (%) = Money Factor * 2400
3. Calculation: APR (%) = 0.0025 * 2400
4. Result: APR (%) = 6
Conclusion: A Money Factor of 0.0025 is exactly equivalent to a 6% APR.
Example 9: Convert Money Factor 0.0005 to APR (Very Low Rate)
Scenario: You find a very low Money Factor of 0.0005.
1. Known Value: Money Factor = 0.0005
2. Formula: APR (%) = Money Factor * 2400
3. Calculation: APR (%) = 0.0005 * 2400
4. Result: APR (%) = 1.2
Conclusion: A Money Factor of 0.0005 is equivalent to a 1.2% APR.
Example 10: Convert Money Factor 0.004167 to APR
Scenario: Your lease terms list a Money Factor of 0.004167.
1. Known Value: Money Factor = 0.004167
2. Formula: APR (%) = Money Factor * 2400
3. Calculation: APR (%) = 0.004167 * 2400
4. Result: APR (%) ≈ 10.0008
Conclusion: A Money Factor of 0.004167 is approximately equal to a 10% APR.
Frequently Asked Questions about Money Factor
1. What is the Money Factor?
The Money Factor is a numerical value used in auto leasing to represent the financing cost or interest rate charged on the lease.
2. How is the Money Factor related to APR?
The standard relationship is that the APR (as a percentage) is equal to the Money Factor multiplied by 2400. Conversely, the Money Factor is the APR percentage divided by 2400.
3. Why do leases use Money Factor instead of APR?
Historically, it simplified manual calculations. Although less crucial with computers, it remains an industry standard term.
4. How do I convert APR to Money Factor?
Divide the APR percentage by 2400. For example, 6% APR / 2400 = 0.0025 Money Factor.
5. How do I convert Money Factor to APR?
Multiply the Money Factor by 2400. For example, a Money Factor of 0.003000 * 2400 = 7.2 APR %.
6. Is a lower Money Factor better?
Yes, a lower Money Factor means a lower financing cost over the term of the lease, resulting in lower monthly payments (assuming other terms are equal).
7. Can the Money Factor be negotiated?
Often, yes. The Money Factor is essentially the interest rate, which can sometimes be marked up by the dealership. It's recommended to know the "buy rate" (the rate the lender offers the dealer) to negotiate effectively.
8. Where can I find the Money Factor for a lease?
It should be disclosed in your lease agreement. You can also ask the dealership for the Money Factor directly when getting a quote.
9. How is the Money Factor used in a lease payment calculation?
The Money Factor is used to calculate the "finance portion" or "rent charge" of your monthly payment. It's typically calculated based on the sum of the capitalized cost (price of the vehicle) and the residual value, multiplied by the Money Factor. The formula varies slightly between lenders, but the MF represents the interest rate applied to the average outstanding balance.
10. What is a typical Money Factor?
Typical Money Factors vary greatly depending on current interest rates, your creditworthiness, the vehicle, and manufacturer incentives. They can range from very low (e.g., 0.0005) for promotional rates to higher values (e.g., 0.0040 or more) for standard rates.
Engineer & Problem-Solver | I create simple, free tools to make everyday tasks easier. My experience in tech and working with global teams taught me one thing: technology should make life simpler, easier. Whether it’s converting units, crunching numbers, or solving daily problems—I design these tools to save you time and stress. No complicated terms, no clutter. Just clear, quick fixes so you can focus on what’s important.
