Money Factor to APR Converter
Convert between a car lease's money factor and its approximate equivalent APR, using the standard industry conversion (money factor × 2400 ≈ APR).
Where the 2400 comes from
The conversion runs both ways off one constant:
APR = money factor x 2400
money factor = APR / 2400A factor of 0.00125 is 3.000% APR; going back, 7.2% APR is a factor of 0.003000. The 2400 is 1200 to turn a monthly rate into an annual percentage, times 2. That second half is the part nobody explains: a lease charges its rent fee on the capitalized cost plus the residual, which is twice the average balance you actually owe, so the rate per dollar has to be halved to compensate. Same interest, expressed against a doubled base.
Reading the number on the quote
| Money factor | APR |
|---|---|
| 0.00050 | 1.20% |
| 0.00125 | 3.00% |
| 0.00208 | 4.99% |
| 0.00250 | 6.00% |
| 0.00375 | 9.00% |
Dealers often drop the leading zeros and say "the factor is 125" or "one twenty-five". If the figure you were given is larger than about 0.01 it has been scaled - shift the decimal until it looks like the middle column above. Ask for the buy rate too, since a markup of 0.00050 on the base factor is another 1.2% of interest that never appears as a rate anywhere on the paperwork.
Frequently asked questions
How do you convert a money factor to an interest rate?
Multiply by 2400. A money factor of 0.00125 is 3% APR, and 0.00300 is 7.2%. To go the other way, divide the APR by 2400.
What money factor is equivalent to 5% APR?
0.00208, or 0.0020833 before rounding. Leasing sheets normally show five decimal places, so you will see it written as 0.00208.
Why is it 2400 rather than 1200?
Because the lease rent charge is applied to the cap cost added to the residual, not to the average of the two. That base is double the money at risk, so the factor is half of the plain monthly rate.