What is Money Factor?

Money factor is the way lease financing expresses the interest cost a customer pays on a leased vehicle. Instead of a percentage rate, it appears as a small decimal such as 0.00125. To convert it to a rough annual interest rate, multiply the money factor by 2,400. So 0.00125 equals about 3 percent. The money factor is set by the leasing company or captive lender and can vary with the customer's credit tier, much like an interest rate on a loan. Canadian F&I managers should be able to explain how the money factor combines with the capitalized cost and residual value to produce the monthly lease payment, since shoppers increasingly compare lease math across dealerships before they visit.