Money factor explained: the hidden interest rate on your lease
What the money factor is, how to turn it into an APR, and how to tell if you're being overcharged.
The single most misunderstood number on a car lease is the money factor. Here's how to read it.
It's just an interest rate
The money factor expresses your finance charge as a small decimal, like 0.00125. To convert it to an approximate APR, multiply by 2,400.
Buy rate vs. marked-up rate
Leasing banks set a "buy rate" based on your credit. Dealers can legally mark it up and keep the difference. Always ask for the buy rate.
What a fair number looks like
Compare your money factor's APR against current new-car finance rates for your credit tier. If it's much higher, push back.
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