Vehicle EconomicsMoney Factor to APR Converter
A money factor hides its real cost behind a small decimal that doesn't look like an interest rate at all. See what it actually means in familiar APR terms.
Why this comes up
A dealer quotes a lease's finance charge as a small decimal, a money factor, like 0.00125 or 0.002, instead of a percentage. Decimals that small are hard to compare against a loan APR by eye, and that's often the point: a money factor that looks tiny can equal a surprisingly ordinary interest rate once converted.
How we calculated this
The standard lease-industry approximation multiplies the money factor by 2400 to get an equivalent APR. It is an approximation, not an exact compounding-adjusted conversion, but it's the same shorthand the leasing industry itself uses.
Worked example, using this page's own default (a money factor of 0.002): that converts to approximately 4.8% APR. Enter your own quoted money factor above to convert it.
What this means
- Once converted, compare this figure directly against a loan APR you're considering, that comparison is not meaningful with the money factor left as a raw decimal.
- A money factor is not the whole lease payment, it only sets the "rent charge" portion, see Car Lease Calculator for the full payment including depreciation.
- If you have an APR quote instead and need the money factor form, the reverse conversion divides APR by 2400.
Limitations
This is an industry-standard approximation, not a claim about the lessor's actual compounding method or a disclosed APR under Regulation M. See Methodology.
Methodology
This engine is built on Vehicle Economics' lease payment and buyout model: cap cost, residual, and money factor split into a depreciation charge and a rent charge. See Methodology for the full detail.