1. What is Car Money Factor?

The Car Money Factor (MF) is a decimal number used by leasing companies to calculate the finance charge portion of your lease payment. It's similar to the interest rate on a loan but expressed differently.

2. How Does the Calculator Work?

The calculator uses the Money Factor formula:

Where:

• \( \text{APR} \) — Annual Percentage Rate (percentage)
• 2400 — Conversion factor from APR to Money Factor

Explanation: The money factor is essentially the APR divided by 2400, which converts the annual percentage rate to a decimal money factor used in lease calculations.

3. Importance of Money Factor

Details: The money factor directly affects your monthly lease payments. A lower money factor means lower finance charges and lower monthly payments. It's crucial to understand this number when negotiating a car lease.

4. Using the Calculator

Tips: Enter the APR (Annual Percentage Rate) as a percentage (e.g., 5.25% would be entered as 5.25). The calculator will convert this to the equivalent money factor.

5. Frequently Asked Questions (FAQ)

Q1: What's a good money factor?
A: Money factors typically range from 0.0010 to 0.0040. A good money factor is generally 0.0020 or lower, which equates to about 4.8% APR.

Q2: How do I convert money factor back to APR?
A: Multiply the money factor by 2400. For example, 0.0025 MF × 2400 = 6% APR.

Q3: Why is 2400 used in the conversion?
A: 2400 comes from (12 months × 200). The 200 factor accounts for the way lease financing charges are calculated.

Q4: Is money factor negotiable?
A: Yes, money factors are often marked up by dealers. You can negotiate this just like you would an interest rate on a loan.

Q5: How does money factor affect my lease payment?
A: The money factor is multiplied by the sum of the net capitalized cost and residual value to determine the finance charge portion of your monthly payment.