Lease contracts never say "interest rate." They say money factor, a five-decimal number like 0.00125 that hides what you're actually paying to finance the car. The conversion takes ten seconds, it changes how you negotiate, and this guide covers the rule, the benchmarks, and the markup games dealers play.
Money factor × 2400 = APR. That's the whole trick. A money factor of 0.00125 equals a 3.0% APR, 0.00200 equals 4.8%, and 0.00290 equals 6.96%. To go from an APR to a money factor, divide by 2400.
Why 2,400 exactly? Divide an APR by 100 and then by 12 and you get a monthly rate written as a decimal: 3% becomes 0.0025. But a lease charges rent on the sum of the cap cost and the residual, roughly twice the average balance a loan charges interest on. The same revenue collected on twice the balance means half the rate, so the equivalent money factor is 0.00125. And 100 × 12 × 2 = 2,400.
Money factor to APR, APR to money factor, plus the monthly rent charge hiding in your lease offer.
Money Factor Converter →Every lease payment has two parts. The depreciation part covers the drop in the car's value (cap cost minus residual, divided by the term). The rent part is the lender's charge for the money, and it's calculated as:
Monthly rent charge = (adjusted cap cost + residual value) × money factor
On a lease with a $32,000 adjusted cap cost and a $19,000 residual, a 0.00125 money factor costs ($51,000 × 0.00125) = $63.75 a month, or $2,295 over 36 months. Quote the same car at 0.00160 and the rent charge is $81.60 a month. Same car, same miles, $643 more over the lease. Small decimals, real dollars.
| Credit score | Typical money factor | As APR |
|---|---|---|
| 740+ | 0.00080 – 0.00150 | 1.92% – 3.60% |
| 700–739 | 0.00110 – 0.00180 | 2.64% – 4.32% |
| 660–699 | 0.00160 – 0.00220 | 3.84% – 5.28% |
| 620–659 | 0.00220 – 0.00280 | 5.28% – 6.72% |
| Below 620 | 0.00280 – 0.00350 | 6.72% – 8.40% |
Two caveats. First, automakers "subvent" lease deals on slow-selling models, and those rates can drop to 0.00050 (1.2% APR) even for ordinary credit, so a headline lease special can beat the whole table. Second, these are typical captive-lender base rates; a dealer markup puts you above them.
Captive lenders publish a buy rate for your credit tier. Dealers can quote you a higher sell rate, commonly capped around 0.00040 above buy, and keep the difference. On that $51,000 example, a full 0.00040 markup is about $20 a month: invisible in a payment-focused negotiation, $732 over the term.
The defense is boring and effective:
The rates themselves are comparable once converted. A 0.00125 money factor and a 3% loan APR cost about the same per dollar financed. The real differences live elsewhere: leases charge rent on cap-plus-residual rather than a declining balance, acquisition and disposition fees add hundreds, and you build no equity. Whether leasing still wins depends on the car's depreciation, the residual the lender guessed, and the deal you negotiate, which is exactly what a full lease payment breakdown shows you.
It's the interest rate on a car lease, written as a small decimal instead of a percentage. A money factor of 0.00125 means the same thing as a 3% APR on a loan. The lender charges it on the average of the car's capitalized cost and its residual value while you're driving it.
Yes. At 0.00125 you're paying the equivalent of 3.0% APR, which beats most auto loan rates for average credit. Top-tier lease deals run 0.00080 to 0.00150 (1.92% to 3.60% APR), and manufacturer subvented specials have gone as low as 0.00050 (1.2%).
Yes, and they often do, typically by up to 0.00040. The lender sets a base buy rate for your credit tier, the dealer quotes you a higher sell rate, and the difference is dealer profit. On a $51,000 cap-plus-residual balance, a 0.00035 markup costs about $18 a month or $643 over 36 months.
It must appear on the lease contract, usually labeled money factor, rent charge factor, or lease rate. If the dealer quotes something like 2.9, ask whether that's the money factor times a thousand. 2.9 means 0.00290, which converts to 6.96% APR. Always get it in writing before signing.