Money Factor

The money factor can be thought of as the equivalent of an interest rate, which is used to determine the portion of the lease payment known as the “rent charge.” The money factor determines how much or how little a lessee will pay in rent charges over the term of a lease. A higher money factor will yield higher monthly lease payments.

The money factor is generally a small decimal, such as .0012 and can easily be converted into its equivalent interest rate by multiplying it by 2400. In this case .0012 would work out to 2.88 percent.

The money factor may or may not be listed in the lease contract, but prospective lessees should always ask the dealer for the money factor to make sure that it is a reasonable rate. The money factor should be comparable to the interest rates available for vehicle financing.

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