Calculating the Money Factor Rate

You need the following information to calculate the Money Factor on your lease:

Total Rent Charge

Lease Term in Months

Adjusted Cap Cost

Residual

The formula is: (Rent Charge/Lease Term)/(Adjusted Cap Cost + Residual)

 Assume that a dealer shows you a lease contract with the following information:

Total Rent Charge = $5,000

Lease Term in Months = 48 months

Adjusted Cap Cost = $31,000

Residual = $14,000

Money Factor = (Rent Charge/Lease Term)/(Adjusted Cap Cost + Residual)

Money Factor = (5,000/48)/(31,000 + 14,000)

Money Factor = .00231

WHAT IS MY INTEREST RATE?

To determine the equivalent Interest Rate = Money Factor * 2400

Interest Rate = .00231 * 2400

Interest Rate = 5.544%