1. What is Money Factor Lease?

A money factor lease is a common method for calculating lease payments in vehicle financing. The money factor represents the lease's interest rate and is typically expressed as a small decimal number.

2. How Does the Calculator Work?

The calculator uses the money factor lease formula:

Where:

• \( \text{Cap Cost} \) — Capitalized cost of the vehicle (negotiated price)
• \( \text{Residual} \) — Estimated value of the vehicle at lease end
• \( \text{Money Factor} \) — Lease's interest rate expressed as a decimal

Explanation: The formula calculates the monthly lease payment by combining the vehicle's cost and residual value, then applying the money factor (interest rate).

3. Importance of Money Factor

Details: Understanding the money factor helps consumers compare lease offers and negotiate better terms. A lower money factor means lower interest charges.

4. Using the Calculator

Tips: Enter the vehicle's capitalized cost, estimated residual value, and the money factor provided by the leasing company. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How is money factor different from APR?
A: Money factor is essentially the lease's interest rate divided by 2400. To convert money factor to APR, multiply by 2400.

Q2: What's a good money factor?
A: Money factors typically range from 0.0010 to 0.0040. Lower is better, with 0.0010 being roughly equivalent to 2.4% APR.

Q3: Can I negotiate the money factor?
A: Yes, money factors are sometimes negotiable, especially if you have excellent credit.

Q4: Does this include taxes and fees?
A: No, this calculates the base payment before taxes, registration, or other fees.

Q5: Why add cap cost and residual?
A: This accounts for both the vehicle's depreciation and the financing cost over the lease term.