Money factor
By Jude Wallis
Money factor is the finance rate on a car lease, quoted as a small decimal instead of a percent. Multiplying it by 2400 converts it to an equivalent annual percentage rate.
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The 2400 is not a convention picked from the air. It is 12 months times 200, where the 200 appears because the lease rent charge is applied to the sum of capitalised cost and residual value rather than to an average balance. Once that is known, the conversion works in both directions and a factor stops being opaque.
A factor of 0.00250 reads as 6 percent. A factor quoted as 2.5 usually means the same thing with the leading zeros dropped, and the difference between those two readings is a factor of a thousand, which is worth a second look on a contract.
The money factor calculator converts between the two forms, the car lease calculator uses the factor in a payment, and car finance and depreciation sets leasing beside buying. APR is the disclosed rate a loan would quote.