1. What is Lease Money Factor?

The Money Factor (MF) in leasing is essentially the interest rate on a lease. It determines how much you'll pay in finance charges over the life of the lease. A lower money factor means lower monthly payments.

2. How Does the Calculator Work?

The calculator uses the Money Factor formula:

Where:

• \( Finance\ Charge \) — Total finance charge over lease term (USD)
• \( Term \) — Lease duration in months
• \( Cap \) — Capitalized cost of the vehicle (USD)
• \( Residual \) — Residual value of the vehicle at lease end (USD)

Explanation: The money factor represents the finance charge per month per dollar of the sum of the capitalized cost and residual value.

3. Importance of Money Factor Calculation

Details: Understanding the money factor helps consumers compare lease offers and negotiate better terms. It directly affects monthly payments and total lease cost.

4. Using the Calculator

Tips: Enter all values in USD. Finance charge is the total interest over the lease term. Cap cost is the negotiated price of the vehicle. Residual is the estimated value at lease end.

5. Frequently Asked Questions (FAQ)

Q1: How is money factor different from APR?
A: Money factor is a decimal representation of the lease interest rate. To convert to approximate APR, multiply by 2400.

Q2: What is a good money factor?
A: Generally, below 0.0020 is good, but this varies by credit score and market conditions.

Q3: Can I negotiate the money factor?
A: Yes, dealers often mark up the buy rate from banks. Those with excellent credit can negotiate this down.

Q4: How does money factor affect my payment?
A: Higher money factor increases the finance portion of your monthly payment.

Q5: Is money factor the only cost in a lease?
A: No, you also pay for depreciation, taxes, fees, and possibly a down payment.