Money Factor
What is a money factor?
The money factor is a lease's finance rate written as a decimal, such as 0.00275. Multiply it by 2,400 for the approximate APR: 0.00275 converts to about 6.6%. It is interest, not a fee. Each month's rent charge equals the adjusted capitalized cost plus the residual value, multiplied by the money factor, which is why it is charged on more than the price of the car.
Key takeaways
- Money factor x 2,400 = approximate APR. The conversion is close but not exact, because lease interest is charged differently than loan interest.
- The rent charge formula is (adjusted cap cost + residual value) x money factor, applied every month of the term.
- The money factor is an interest rate, not a fee. Sites that describe it as merely 'like' interest are underselling it.
- Leasing companies set a buy rate; dealers can usually quote you a higher money factor and keep the difference.
What does the money factor actually charge you?
The money factor produces the rent charge, the interest portion of every lease payment. The formula: (adjusted capitalized cost + residual value) x money factor, each month. On a hypothetical car with a $30,000 adjusted cap cost, a $19,200 residual, and a 0.00275 factor, the rent charge is $49,200 x 0.00275 = $135.30 a month, every month of the term.
Notice the base: $49,200 on a $30,000 car. A lease charges its rate on the sum of what you are using up and what the leasing company keeps, which is why a decimal that looks microscopic moves the payment more than intuition says it should.
Is money factor times 2,400 exact?
It is an approximation, and a good one, not an identity. A loan charges interest on a balance that declines to zero; a lease charges its factor on a fixed base of cap cost plus residual. The 2,400 conversion reconciles the two conventions closely enough for comparison shopping, which is its whole job.
| Money factor | Approximate APR |
|---|---|
| 0.00100 | 2.40% |
| 0.00200 | 4.80% |
| 0.00275 | 6.60% |
| 0.00300 | 7.20% |
| 0.00400 | 9.60% |
Some explainers describe the money factor as "similar to" an interest rate. It is not similar to one; it is one, wearing decimal notation.
Is the money factor negotiable?
The leasing company sets a buy rate for each credit tier. Most allow the dealer to quote a marked-up factor and keep the difference, within a cap. So the factor is negotiable in one direction: down to the buy rate, if you ask what the buy rate is. It does not go below what the leasing company requires, except through programs like multiple security deposits where the captive offers a published reduction.
For how to find your quote's factor, check it for markup, and see what a markup costs in dollars, see the full explainer: what is a money factor on a lease.
Common questions
How do you convert a money factor to an APR?
Multiply by 2,400. A 0.00275 money factor is approximately a 6.6% APR. Going the other way, divide the APR by 2,400: a 6% rate is a 0.00250 money factor. Treat the result as approximate, not exact.
Why is the money factor multiplied by both cap cost and residual?
Because during the lease you are effectively financing the whole car, the part you use up and the part the leasing company gets back. The formula (adjusted cap cost + residual) x money factor averages the interest over the term. On a $30,000 car with a $19,200 residual, the factor applies to $49,200.
Is a money factor of 0.00275 good?
Convert it first: 0.00275 is about 6.6% APR. Compare that against current loan rates, which averaged 6.39% on new vehicles in Q1 2026 per Experian, and against the buy rate for your credit tier. Subsidized lease programs can price lower; marked-up quotes price higher.
Is the money factor the same as the rent charge?
No. The money factor is the rate; the rent charge is the dollar result. Federal lease disclosures show the rent charge in dollars, not the money factor, which is 1 reason most people never see their lease's rate.
Sources
- What Is the Lease Money Factor? — Capital One Auto Navigator