The conversion is worth knowing: multiply the money factor by 2,400 and you have the lease rate as an annual percentage, so a money factor of 0.00250 works out to 6.0 percent. People often call it an APR, but a lease has no APR under federal rules: it is a lease rate expressed as an annual percentage, and it may not measure the overall cost of financing a lease. The rule works because a money factor is the monthly rate divided by two, and 12 months times 2 times 100 is 2,400.
Worked table.
Rent charge is (selling price plus residual) multiplied by the money factor: ($50,000 plus $30,000) times 0.00250 is $200 a month. It is the part of a lease payment that is not depreciation or tax. The percentages are a lease rate expressed as an annual percentage, not an APR; this percentage may not measure the overall cost of financing a lease.
Money factor
As an annual percentage (not an APR)
Rent charge per month on a $50,000 selling price and $30,000 residual
0.00100
2.4%
$80
0.00150
3.6%
$120
0.00200
4.8%
$160
0.00250
6.0%
$200
0.00300
7.2%
$240
0.00350
8.4%
$280
What moves the money factor.
The program. Manufacturers subsidize rates on models they want to move; the same month, another model in the lineup carries a standard rate.
Your credit tier. Lenders add to the base factor for lower tiers. The Model Black prices by the credit range you set in your profile.
Structure. A one-pay lease lowers it; each multiple security deposit lowers it by a set amount where the captive offers them (0.00007 with Mercedes-Benz Financial Services).
Dealer participation. Dealers have the option to include dealer participation on the money factor. On The Model Black the example payment you see already includes any participation the participating dealership sets, and the lender sets your final rate when your application is submitted.
What a good money factor looks like.
Good is relative to the base rate the lender publishes that month for that model and term. A payment built on the base rate, or on a subsidized rate, is the number to aim for. The Model Black prices a car on the manufacturer's program only while one is in effect for it, and the car page says whether its lease is on a factory program or a market-based estimate, so the way to check is to compare the payment on the vehicle page against the same car on any other site with the same term, miles, and money down.
The payment leads, and the vehicle page's disclosure lists the residual behind it. The dealership's lease contract states the final figures, including the rent charge in dollars.
Try a money factor.
Type your own numbers and see the same car priced as cash, as a loan, and as a lease, with the taxes and state fees for Arizona. Nothing you type leaves this page.
An estimate on the numbers you type, not an offer of credit or a quote from any dealership. Starting loan rates are Rateous's rates for each credit range and term; they are not an offer from any lender. The residual and money factor are the ones you type for your car, and the acquisition fee starts at an example figure; the leasing company sets the real ones. The documentary fee starts at an example figure, the state's legal cap where it has one or $599 where it does not, not any dealership's fee; each dealership sets its own. Taxes and state fees are estimates for Arizona; the dealership's paperwork and your motor vehicle agency have the final numbers. What you own at the end assumes the car is worth the residual. Nothing you type is sent, saved, or used to check your credit.
Quick answers.
Why 2,400?
A money factor is the monthly interest rate divided by two (because interest is charged on the average of the price and residual). Multiply by 2 to undo the halving, by 12 for a year, and by 100 for a percentage: 2,400.
Is a lower money factor always a better lease?
No. Residual matters as much. A high residual with an average factor can beat a low factor with a weak residual. Compare payments, not factors.
Does The Model Black tell me the money factor on my lease?
Not on the site. The vehicle page's disclosure lists the residual behind the estimate; ask the dealership for the money factor on your lease. The dealership's lease contract discloses the rent charge, which is the money factor's effect in dollars.
Does the money factor include dealer participation?
Dealers have the option to include dealer participation on the example rates shown. On The Model Black the payment shown already includes any participation the participating dealership sets, and your final rate comes from the dealership's lenders once your application is submitted.
Payment figures on this page are illustrations of a closed-end lease, not an offer to lease. The lessor sets the terms, and excess mileage and excess wear and use charges may apply at lease end. Plus each dealership's own documentary fee (not a government fee), taxes, and government fees.