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Lease Money Factor to APR Calculator

Enter a money factor or APR and pick a direction to convert.

How it is calculated

The two conversions are simple multiplication and division by 2400: APR % = money factor × 2400 and money factor = APR % / 2400. The 2400 combines three things: 12 months, a factor of 2 because the monthly lease charge is worked out on the average of the capitalised cost and the residual value, and 100 to turn a fraction into a percent. The direction setting decides which way the value you enter is read; if none is chosen, it is read as a money factor. The value must be zero or more. The money factor is shown to six decimals and the APR to two. The APR is a nominal equivalent rate, so it is good for comparing offers but does not include fees, taxes or an acquisition charge.

Worked example

A dealer quotes a money factor of 0.00125. Multiply by 2400: 0.00125 × 2400 = 3.00 %, so the lease charges about 3% a year. Going the other way, an APR of 5.4% divided by 2400 gives a money factor of 0.002250. If a dealer quotes 0.00225 for a car you could finance at 3%, the lease finance cost is the higher of the two, which is easy to miss when looking at the decimal alone.

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Common mistakes

  • Typing an APR while the direction is set to money factor to APR: entering 5.4 then shows 12,960.00 %, so check the direction first.
  • Entering the money factor as a percentage such as 0.125 instead of 0.00125; the decimal places matter.
  • Multiplying by 24 instead of 2400 and ending up with a number 100 times too small.
  • Comparing the converted APR with a loan APR as if the rates behave identically: the lease rate applies to a different balance base and has no amortising payment of its own.
  • Forgetting that fees, taxes and the acquisition fee are separate from the money factor and are not included in the converted rate.

Sources

About this calculator

Car dealerships quote lease financing cost as a money factor — a small decimal like 0.00125 — instead of the annual percentage rate consumers are used to seeing on loans, which makes it hard to compare a lease's true cost to a car loan or another lease at a glance. The two are directly related: multiplying the money factor by 2400 converts it to the equivalent APR, and dividing an APR by 2400 converts it back.

This calculator converts in either direction, giving car shoppers and lease negotiators the APR-equivalent number they need to actually compare a dealer's quoted money factor against loan rates or competing lease offers, rather than being stuck evaluating an unfamiliar decimal in isolation.

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Comments (1)

  • Editorial team

    Small changes in the decimal are bigger than they look. A money factor of 0.00125 converts to 3.00 percent and 0.0025 to 6.00 percent, so doubling the decimal doubles the rate. When two offers quote different factors, convert both before comparing. Also ask whether the factor you were given already includes any dealer markup. Do you have a quote you are trying to compare with a loan rate?

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