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  • Writer's pictureJohn J

What is Money Factor?

The money factor is a method for determining the financing charges on a lease with monthly payments. The money factor can be translated into the more common APR by multiplying the money factor by 2,400.

Money factor is used to determine the interest portion of monthly lease payments, In other words, it is the interest rate that is paid for the duration of a lease term. It is similar to the interest rate paid on a loan, but the value is expressed differently. Unlike APR, which is expressed as a percentage, the money factor is expressed in a decimal format.

Figure 1

Figure 1 shows the Money Factor for various lease duration. The tier levels correspond with credit worthiness, with Tier 1 reflecting money factor for those with an Excellent credit rating.

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