Money factor to APR converter
A money factor is a monthly rate written as a decimal, and multiplying it by 2400 reads it on the scale of an annual percentage rate.
Enter the factor from the lease worksheet. This returns the approximate APR equivalent.
Written on a worksheet without its leading zero, as .00275.
Approximate APR equivalent
6.6%
A money factor of .00275, multiplied by 2400.
- Money factor
- .00275
- Multiplied by
- 2400
- Approximate APR equivalent
- 6.6%
- Cap cost plus residual
- $63,000.00
- Rent charge each month
- $173.25
Next step
Have us structure this leaseHow representation worksComplimentary 15-minute call, at a time you choose.
The link carries the money factor, the rate, the capitalized cost and the residual. Send it with a booking and the fifteen minutes start on your numbers.
The negotiated price plus anything rolled in, less any cash at signing.
What the lender says the vehicle is worth at the end of the term.
Twelve annualizes a monthly rate. The other 200 is there because the rent charge is levied on the sum of the capitalized cost and the residual rather than on a declining balance. On a $40,000.00 cap cost against a $23,000.00 residual, the charge is computed on $63,000.00. Averaged across the term, roughly half of that is outstanding at any moment, which is the factor of two.
A captive lender sets a buy rate and a dealer may add to it. The factor you are quoted is the sum of the two, so converting it tells you the rate you are being offered rather than the rate the lender set. The difference is negotiable, and it is one of the places a lease is negotiated without the word discount appearing anywhere.
How this is calculated
A money factor is a monthly rate written as a decimal. Multiplying by 12 annualizes it. Multiplying by 200 converts the lease convention into a percentage, because the rent charge is levied on the sum of the capitalized cost and the residual rather than on a declining balance. The two together are 2400.
The conversion runs both ways. Factor to rate is the direction most people need, because the factor is the number on the worksheet in front of them. Rate to factor reads a rate you already know as a factor, so a quote can be compared against it. It does not tell you what factor a lender will offer.
A factor of .00275 is 6.6%. Written as a factor it reads as a rounding error, which is the practical reason this page exists.
A worked example
A quoted factor of .00275
- Quoted money factor
- .00275
- Multiply by 2400
- .00275 × 2400
- Approximate APR equivalent
- 6.6%
- On a $40,000 cap cost and a $23,000 residual
- $173.25 a month in rent charge
The rent charge is computed on $63,000, which is the cap cost plus the residual, not on the $40,000 alone.
What this assumes
- The conversion is exact arithmetic. It embeds no published figure and nothing in it ages. An APR equivalent is not a disclosed rate. Federal law requires a lender to disclose an APR on a loan and sets no standard rate for a lease, and the 2400 convention approximates the rate a lease implies.
- A quoted money factor already includes the lender’s margin over the buy rate. Converting it tells you the rate you are being offered, not the rate the captive lender set.
- The rent charge is levied on the sum of the adjusted capitalized cost and the residual. That convention is what the constant 2400 encodes.
Where these figures come from
Nothing on this page is transcribed. A money factor multiplied by 2400 gives an approximate APR equivalent, and that relation is arithmetic rather than a published figure, so nothing here ages.
Reviewed by CarOracle, a California-licensed auto dealer with an auto broker’s endorsement, license #43082.
Every figure on this page is an estimate, not a quote. A lender, a dealer and the DMV each set their own, and only a signed contract settles what you pay.
Run your own numbers with us
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