Lease money factor to APR calculator.

Worked example

Agreed price $35,000, nothing else capitalized, no cap cost reduction, residual $21,000, 36 months, money factor 0.00125. Adjusted cap cost = $35,000. Depreciation = $35,000 - $21,000 = $14,000, or $388.89 a month. Rent charge per month = ($35,000 + $21,000) x 0.00125 = $70.00. Payment = $388.89 + $70.00 = $458.89 before tax and fees. APR-equivalent = 0.00125 x 2400 = 3.00%. Solving exactly for the monthly rate that makes 36 payments and the residual equal the $35,000 gives 2.97%, so the shortcut is close here.

Formula notes

Depreciation = adjusted cap cost - residual. Rent charge (monthly) = (adjusted cap cost + residual) x money factor. Payment = depreciation / term + rent charge. Adjusted cap cost = gross cap cost - cap cost reduction.

Federal Regulation M defines the terms: gross capitalized cost, capitalized cost reduction, adjusted capitalized cost, residual value, depreciation and any amortized amounts (the adjusted cap cost minus the residual) and rent charge (the total of base periodic payments minus depreciation). Source: 12 CFR 1013.4, Content of disclosures (Cornell LII), read 2026-09-30.

The x2400 conversion is not from a government source. I could not open a primary-source statement of it, so this page shows the derivation instead: the average balance you pay interest on is about (adjusted cap cost + residual) / 2, so monthly interest is about that amount x APR / 12. Equating it to (adjusted cap cost + residual) x money factor gives money factor = APR / 24, i.e. APR% = money factor x 2400. Regulation M does not define the money factor itself; the rent-charge-from-money-factor formula is a leasing convention, and lessors may build payments differently (for example, with an acquisition fee or payment in advance). The exact rate check assumes monthly compounding and payments at the end of each month.

FAQ

How do I convert a money factor to APR?

Multiply the money factor by 2400. A money factor of 0.00125 is about 3.0% APR. To go the other way, divide the APR percentage by 2400.

Why 2400?

Over the lease you are charged interest on roughly half of the amount (adjusted cap cost plus residual) because the balance falls toward the residual. Interest per month is about that amount times APR divided by 12, and setting it equal to the amount times the money factor gives money factor = APR / 24, or APR% / 2400. It is a shortcut, which is why the tool also shows an exact rate check.

Is the money factor on my lease a legal APR?

No. Regulation M requires a lessor to disclose the rent charge and the other lease amounts, but the money factor and its APR equivalent are industry conventions. Ask the dealer for the money factor in writing and compare it to the buy rate.

Does a bigger cap cost reduction lower the rate?

It lowers the payment, not the money factor. Because the money factor applies to the adjusted cap cost plus the residual, a down payment shrinks the rent charge, but you also put cash at risk if the car is totaled or stolen early.

Which is cheaper, leasing or buying?

It depends on the assumed value of the car when the lease ends, the loan rate and how long you would keep it. The lease vs buy tab compares the net cost over the lease term under stated assumptions; it is not a recommendation.

This tool is a planning estimate, not financial advice or a lease offer. Taxes, acquisition and disposition fees, mileage charges and insurance are not included unless you add them as capitalized costs. Confirm every number against your lease disclosure.