Free preview · from the dealership side of the desk
The money factor is the interest rate on a lease, written as a tiny decimal like .00210 that almost nobody can judge. It’s the easiest place in a lease to add profit without the payment looking wrong, and the federal lease disclosure doesn’t require the dealer to show it to you. Here’s the free trick: multiply it by 2,400 to get the approximate APR. So .00210 is about 5.0%, and .00250 is about 6.0%.
From the dealership side, it works like a marked-up loan rate. The lender sets a buy rate for your credit tier and often lets the dealer charge more, up to a limit; the difference is dealer profit. On a $40,000 cap cost with a $24,000 residual, a markup of just .00040 adds about $26 a month, roughly $920 over 36 months. Below: how to find the real buy rate before you sit down, how to back-solve the rate from a contract, and what to say when the dealer says no.
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In the full guide
- Converting money factor to APR
- What the buy rate is
- How the markup works
- How to find the buy rate
- Back-solving the money factor from a contract
- Things that legitimately change the rate
- When the dealer says no
- What to say
- The checklist
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