Unexpectedly Intriguing!
22 May 2006

Did you ever look at leasing a car from a dealer? And if you did, were you confused when they quoted you a money factor instead of an interest rate when determining your monthly payment (assuming they did)?

As it happens, the money factor is a percentage that represents the cost of the money required to lease a vehicle and is similar to (but not the same as!) the interest rate paid on a loan. By law, it will not appear in the terms of your lease agreement - even though it's used in establishing the finance fee portion of your monthly payment.

For you as a consumer, being able to determine the money factor can help you determine whether or not you're overpaying for a lease. That's why we've created the following tool, which you may use to extract the lease money factor from the lease agreement you're considering. The tool below will also approximate the Annual Percent Rate of interest, which will allow you to compare your cost of money in leasing with the cost of borrowing (via a conventional loan) for owning instead:

Lease Agreement Data
Input Data Values
Term of Lease (Months)
Cap Cost (Negotiated Base Price of Vehicle)
Down Payment (and/or Trade-In Value)
Residual Value at End of Lease
Monthly Lease Payment (Not Including Sales Tax)


Leasing Fees, Money Factor and APR
Calculated Results Values
Depreciation Fee Portion of Monthly Lease Payment
Finance Fee Portion of Monthly Lease Payment
Lease Money Factor
Approximate APR (%)

The math underlying the tool above is presented by LeaseGuide.com. Also, the single best discussion of lease money factor, and how it may be calculated, is presented by efunda, a very cool resource for engineers.

Labels: , , ,

About Political Calculations

Welcome to the blogosphere's toolchest! Here, unlike other blogs dedicated to analyzing current events, we create easy-to-use, simple tools to do the math related to them so you can get in on the action too! If you would like to learn more about these tools, or if you would like to contribute ideas to develop for this blog, please e-mail us at:

ironman at politicalcalculations

Thanks in advance!

Recent Posts

Indices, Futures, and Bonds

Closing values for previous trading day.

Most Popular Posts
Quick Index

Site Data

This site is primarily powered by:

This page is powered by Blogger. Isn't yours?

CSS Validation

Valid CSS!

RSS Site Feed

AddThis Feed Button

JavaScript

The tools on this site are built using JavaScript. If you would like to learn more, one of the best free resources on the web is available at W3Schools.com.

Other Cool Resources

Blog Roll

Market Links

Useful Election Data
Charities We Support
Shopping Guides
Recommended Reading
Recently Shopped

Seeking Alpha Certified

Archives