1. What is Money Factor?

The Money Factor is a decimal number that represents the lease's interest rate. It's essentially the lease equivalent of an interest rate on a loan, but expressed differently.

2. How Does the Calculator Work?

The calculator uses the Money Factor formula:

Where:

• \( APR \) — Annual Percentage Rate (as a percentage)
• 2400 — Conversion factor to transform APR to Money Factor

Explanation: The equation converts the annual percentage rate (APR) into the money factor used in lease calculations.

3. Importance of Money Factor

Details: The money factor is crucial for determining the finance portion of your lease payment. A lower money factor means lower financing costs.

4. Using the Calculator

Tips: Enter the APR as a percentage (e.g., 5.5 for 5.5%). The calculator will convert it to the money factor decimal used in lease calculations.

5. Frequently Asked Questions (FAQ)

Q1: What's a good money factor?
A: Generally, a money factor below 0.0020 (equivalent to ~4.8% APR) is considered good, but this varies by market conditions.

Q2: How is money factor different from APR?
A: Money factor is just another way to express the interest rate on a lease. It's essentially the APR divided by 2400.

Q3: Why is 2400 used in the conversion?
A: 2400 comes from (12 months * 200). The 200 accounts for the averaging of the principal balance over the lease term.

Q4: Can I negotiate the money factor?
A: Yes, the money factor is often negotiable, though some manufacturers set fixed rates for promotional leases.

Q5: How does money factor affect my lease payment?
A: A higher money factor increases the finance charge portion of your monthly lease payment.