Free Lease Money Factor calculator with clear step-by-step results.
A lease quotes interest as a money factor rather than a rate, and the conversion is fixed: money factor = APR ÷ 2400. A 6.9% APR is therefore 0.00288, and a factor quoted as "2.88" is the same thing scaled by 10,000. The rent charge is unusual in that it is calculated on the capitalized cost plus the residual, not on a declining balance, because you are financing the whole vehicle for the term even though you only pay off the depreciation.
Money factor
Money factor = APR ÷ 2400
Rent charge
Monthly rent charge = (capitalized cost + residual value) × money factor
Lease structures, fees and disclosure rules vary by lender and jurisdiction, and quoted factors may already include acquisition fees. Review the lease agreement in full and seek independent advice before signing.
The 1200 converts an annual rate to a monthly one; the extra factor of 2 accounts for the rent charge being applied to the sum of the capitalized cost and residual rather than to an average balance. The two conventions cancel to give an equivalent monthly interest cost.
It equals 6.9% APR. Multiply any quoted factor by 2400 to compare it against loan rates — that is the only reliable way to tell whether a lease is competitively priced.
Because the lessor has capital tied up in the whole car for the entire term, not just the part you consume. A high residual lowers your depreciation payment but does not lower the rent charge proportionally.