At a glance
- Money factor to APR
- Money factor x 2,400
- APR to money factor
- APR / 2,400
- Example
- 0.00250 = 6.0% APR
Why 2,400?
The rent charge formula adds the cap cost and the residual, which counts the average balance twice, and works per month. So the money factor is the APR divided by 12 months, divided by 2, divided by 100 to turn a percent into a decimal: 12 x 2 x 100 = 2,400.
Common money factors
| Money factor | APR |
|---|---|
| 0.00100 | 2.4% |
| 0.00150 | 3.6% |
| 0.00200 | 4.8% |
| 0.00250 | 6.0% |
| 0.00300 | 7.2% |
| 0.00350 | 8.4% |
| 0.00400 | 9.6% |
Spotting a marked-up money factor
The leasing company sets a buy rate for each credit tier, and dealers may add to it. Ask the dealer for the money factor, convert it, and compare with what a bank would charge on a loan. If it is well above, ask for the buy rate.