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Lease money factor, explained
The money factor is the interest rate on a lease, written as a small decimal like 0.00250. It's easy to overlook and, at many dealers, it can be marked up.
Convert it to an APR
Money factor × 2400 ≈ APR. 0.00250 × 2400 = 6.0%. Going the other way, APR ÷ 2400 = money factor, so 4.8% ≈ 0.00200.
Why 2400? The rent charge is figured on the adjusted cap cost plus the residual, which is roughly twice the average amount you're borrowing over the lease. Multiply by 12 months and by 100 to turn it into a percentage, and 2 × 12 × 100 = 2400. It's an approximation, but a good one for comparing offers.
How the payment is built
- Depreciation fee = (adjusted cap cost − residual value) ÷ number of months
- Rent charge = (adjusted cap cost + residual value) × money factor
- Base payment = depreciation fee + rent charge
- Tax: many states tax the monthly payment, but some tax differently (for example, upfront on the total). Check your state.
The adjusted cap cost is the negotiated price plus fees rolled in (like the acquisition fee), minus any cap cost reduction (cash down, trade equity or rebates). The residual is the lender's estimate of the car's value at lease end, set as a percent of MSRP.
Worked example (illustrative numbers)
| MSRP | $42,000 |
| Residual (58% of MSRP) | $24,360 |
| Adjusted cap cost | $39,095 |
| Term | 36 months |
| Depreciation fee | ($39,095 − $24,360) ÷ 36 = $409.31/mo |
| Rent charge at base MF 0.00240 (≈5.76% APR) | ($39,095 + $24,360) × 0.00240 = $152.29/mo |
| Rent charge at quoted MF 0.00310 (≈7.44% APR) | ($39,095 + $24,360) × 0.00310 = $196.71/mo |
That 0.0007 difference costs about $44 a month, roughly $1,600 over the lease before tax, for the same car at the same price.
Base rate vs. marked-up rate
The lender (often the manufacturer's own finance company) sets a base or "buy rate" money factor each month by model, term and credit tier. Lenders often let dealers add a markup, up to a limit the lender sets, and the dealer keeps part of that extra rent charge. You're allowed to ask what the base rate is.
- Ask for the money factor in writing, with your credit tier: "Is this the base money factor for tier 1?"
- Check the manufacturer's current advertised lease offers and owner forums (for example, the Edmunds lease forums), where people post monthly money factors and residuals by model.
- If the quoted number is higher than base and your credit qualifies for the top tier, ask to have it written at base.
Other levers that move a lease payment
- Cap cost: negotiable, just like a purchase price. Start here.
- Residual: set by the lender and generally not negotiable. A higher residual lowers the payment.
- Acquisition fee: a lender fee to set up the lease. Some dealers mark it up; ask what the lender actually charges.
- Money down: large cap cost reductions lower the payment, but if the car is totaled or stolen early, that money is usually gone. Many leases include gap coverage, so check your contract before buying it separately.
- Multiple security deposits: some lenders let you pay refundable deposits to lower the money factor. Availability varies.
What to say
"What's the base money factor from the bank for my credit tier this month? I'd like the lease written at base."
"Show me the lease worksheet: cap cost, residual, money factor, fees and anything else in the payment."
Snap it or type the numbers. The free checker circles junk fees, add-ons and payment packing in about a minute. Nothing is uploaded.
Check my deal free →Educational only, not financial, legal or tax advice. Rules, fees and lender practices vary by state, lender and vehicle. Verify with your state, lender and the final contract. Last updated October 17, 2026.