Lease Factor (Money Factor)

The lease factor (or money factor) is a small decimal number (.00XX) that, when multiplied by the equipment cost, determines the finance charge portion of your monthly payment. To convert lease factor to interest rate, multiply by 2,400. For example, a .0050 lease factor equals 12% APR (.0050 × 2,400 = 12%). Lease factor incorporates the lessor's cost of funds, profit margin, and risk assessment. Lower lease factors mean lower monthly payments. Lease factor affects only the finance portion of payments - total monthly payment also includes principal paydown and any service fees. Lease factors range typically from .0025 (6% APR) to .0075 (18% APR) depending on creditworthiness, lease term, and market conditions. When comparing leases, always convert lease factors to APR for accurate comparison. Better credit scores qualify for lower lease factors. Ask potential lessors for their best lease factor based on your credit and lease term.