1. What is a Lease Factor Rate Calculator?

Definition: This calculator converts an annual interest rate percentage into a money factor used in vehicle leasing.

Purpose: It helps consumers understand and compare lease offers by converting the APR to the money factor format used by dealers.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• Money Factor — Dimensionless number representing the lease rate
• Annual Interest Rate — The interest rate in percentage (%)

Explanation: The annual interest rate is divided by 2400 to convert the percentage into a decimal money factor.

3. Importance of Money Factor Calculation

Details: Understanding the money factor helps consumers evaluate lease terms, compare offers, and negotiate better deals.

4. Using the Calculator

Tips: Enter the annual interest rate in percentage (%). The value must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: Why divide by 2400 specifically?
A: Dividing by 2400 converts a percentage to a decimal and accounts for the 12 months in a year (APR × 100 ÷ 12 × 2).

Q2: What's a good money factor?
A: Generally, 0.00125 (3% APR) or lower is considered good, but this varies by market conditions.

Q3: How can I convert money factor back to APR?
A: Multiply the money factor by 2400 to get the approximate APR.

Q4: Why do dealers use money factors instead of interest rates?
A: Money factors make lease payments appear smaller and can be less intuitive for consumers to compare.

Q5: Does credit score affect the money factor?
A: Yes, just like with loan interest rates, better credit scores typically qualify for lower money factors.