1. What is the Auto Lease Interest Calculation?

The Auto Lease Interest calculation converts the money factor (MF) used in leasing to an annual percentage rate (APR) that's more familiar to consumers. This helps compare lease offers with traditional financing options.

2. How Does the Calculator Work?

The calculator uses the simple formula:

Where:

• \( APR \) — Annual Percentage Rate (%)
• \( MF \) — Money Factor (decimal)

Explanation: The money factor is multiplied by 2400 to convert it to an equivalent annual percentage rate. This conversion accounts for the monthly nature of lease payments.

3. Importance of APR Calculation

Details: Converting the money factor to APR allows consumers to better understand the true cost of leasing and compare it with other financing options. It provides a standardized way to evaluate lease offers.

4. Using the Calculator

Tips: Enter the money factor as provided by the leasing company (typically a decimal like 0.00125). The calculator will convert this to an equivalent APR percentage.

5. Frequently Asked Questions (FAQ)

Q1: What is a good money factor?
A: Money factors vary by credit score and market conditions. Generally, below 0.0015 (3.6% APR) is considered good for prime credit.

Q2: Why multiply by 2400?
A: 2400 accounts for both the monthly nature of payments (12 months) and the conversion from decimal to percentage (×100).

Q3: Is APR the only factor in lease cost?
A: No, also consider capitalized cost, residual value, fees, and mileage allowances when evaluating a lease.

Q4: Can I negotiate the money factor?
A: Yes, though dealers may be less willing to negotiate MF than purchase APR. Those with excellent credit typically get the best rates.

Q5: How does this compare to a loan APR?
A: While calculated differently, the resulting APR allows direct comparison between leasing and buying with financing.