SharpLease

Lease Money Factor

Money Factor – The Money Factor is just another way to represent the Interest Rate when you lease a vehicle.

Before we go further into the Money Factor, let’s stop for a minute and talk about auto leasing. Auto leasing is a method of financing a vehicle for a certain length of time. It is similar to purchasing a vehicle because in both cases you are borrowing money to pay for the use of the car. When you buy a car, you must borrow enough money to pay for the car outright and you can keep if for as long as you like. When you lease a vehicle you are still borrowing money, but you only get to use the car for a specific period of time. And since you are only using the car for a specific period of time, you only have to pay for the use of the car during that timeframe (see our Terminology Page for more information about depreciation).


In either case (buying or leasing a car) you are borrowing money and when you do that you must pay interest to the institution from which you are borrowing the money (bank, leasing company, etc.). But the formulas used to calculate monthly payments are different for buying VS leasing and the leasing formula uses Money Factor instead of Interest Rate.

But, as I said before, the Money Factor is just another way to represent the Interest Rate when you lease a vehicle. The Money Factor is just an Interest Rate expressed in a way that can be used in the Lease Calculation. It is very easy to calculate Money Factor or Interest Rate if you already have one of the values, see the two formula below:

Money Factor Formula: Money Factor = Interest Rate / 2400


Interest Rate Formula: Interest Rate = Money Factor * 2400

For Example, if you know the Interest Rate is 1.5% you would divide by 2400 to get the Money Factor.

Money Factor Formula: Money Factor = Interest Rate / 2400

Calculation: .000625 = 1.5% / 2400

Money Factor: .000625

The Money Factor to Interest Rate calculator page contains two calculators: Enter the Money Factor to calculate the Interest Rate. Or enter the Interest Rate to calculate the Money Factor.