What is the money factor on a car lease?
The money factor is how a leasing company expresses the finance charge (interest) on your lease. It looks like a small decimal, e.g. 0.00125. Multiply it by 2,400 to get the rough equivalent APR (0.00125 × 2,400 = 3% APR). A lower money factor means a cheaper lease.
Why it matters
Every lease has one. What matters is whether it reflects a fair rate for your credit. Dealers can mark it up, so it's worth asking for the 'buy rate.'
What dealers don't tell you
- A money factor much higher than current new-car rates for your credit tier.
- The dealer refusing to disclose the money factor.
- A marked-up rate hidden inside a low monthly payment.
How to negotiate it
- Ask for the money factor in writing and convert it to APR (× 2,400).
- Compare it against manufacturer 'lease specials' and your bank's rates.
- Ask the dealer to use the unmarked buy rate.
Worked example
"Lease charge is calculated using a money factor of 0.00250." That is roughly a 6% APR.
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Explain my car leaseFrequently asked questions
Is a lower money factor always better?
Yes, a lower money factor means you pay less in finance charges over the lease. Just make sure the lower payment isn't offset by a higher price or fees.
Related terms
The negotiated price of the car for leasing purposes, plus any added fees.
The car's projected worth at lease end, which sets your payment and buyout price.
The unmarked money factor the lender actually offers — before the dealer adds profit.
A manufacturer-subsidized lease with an artificially low money factor or inflated residual.