1. What is Money Factor to Interest Rate Conversion?

The Money Factor is a decimal number used in vehicle leasing to represent the cost of financing. Converting it to an interest rate percentage makes it easier to compare with traditional loan rates.

2. How Does the Calculator Work?

The calculator uses the conversion formula:

Explanation: The multiplication by 2400 converts the decimal money factor to an equivalent annual percentage rate (APR).

3. Importance of This Conversion

Details: Understanding the equivalent interest rate helps consumers compare lease offers with traditional auto loans and make more informed financing decisions.

4. Using the Calculator

Tips: Enter the money factor (typically a small decimal like 0.0025). The calculator will instantly show the equivalent interest rate percentage.

5. Frequently Asked Questions (FAQ)

Q1: Why multiply by 2400 specifically?
A: 2400 comes from (365 days/year × 24 hours/day) ÷ 365.25 (accounting for leap years) × 100 (to convert to percentage).

Q2: What's a good money factor?
A: Generally, below 0.0020 is good (equivalent to 4.8% APR). Dealers may mark up the money factor for profit.

Q3: Is this the same as APR?
A: It's similar but not identical. The converted rate gives you a comparable figure to APR for easier understanding.

Q4: Can I negotiate the money factor?
A: Yes, especially if you have good credit. The dealer's buy rate (from the bank) is often lower than what they offer.

Q5: Does this account for all lease costs?
A: No, it only converts the financing cost. Other factors like residual value, fees, and taxes also affect total lease cost.