go4gr8

I'm still undecided as to finance or lease. One reason - I need to know how the money factor works in leasing.

Can someone please enlighten me?

trendy26

It's the same as an Interest Rate. To convert the money factor to the interest rate, just multiply it by 24.

go4gr8

24? Why 24?

CrazyRuskie

iTrader: (3)

Here is the correct way to calculate a lease:


(Cap Cost – Residual Value) / Term = Depreciation
(Cap Cost + Residual Value) X Money Factor = Interest
Depreciation + Interest = Base Monthly Payment

trendy26

24 is just he fomula for how they calculate it...

WasabiPossum

iTrader: (1)

No, the figure is 2400. Example: To find the interest rate, multiply the MF by 2400. This number is used for any lease, 24 months to whatever the number of months of the lease term.

MF of .00250 X 2400 = 6%
.00285 X 2400 = 6.84%
.00150 X 2400 = 3.6% and so on.

trendy26

No, it's 24, THEN you convert the decimal to a percent, Smart Guy...

CrazyRuskie

iTrader: (3)

^^ You are obviously both right, but by multiplying it by 2400, you skip the extra step of converting it to a percent.