How this number is made
Lease ads quote a money factor instead of an APR. The conversion used in the business is to multiply by 2,400. A factor of 0.00125 is about 3% APR.
- Type the factor as a decimal, such as 0.0018, not as 1.8.
- If the sheet shows 1.80, that is sometimes the factor times 1,000. Divide by 1,000 first.
Formula
APR ≈ money factor × 2,400.
Worked example
With the figures already in the form, approximate apr is 4.32%.
Questions
Is the conversion exact?
It is the standard commercial conversion, not a truth-in-lending APR with fees. Fees in the cap cost change the real cost.
Can I negotiate the factor?
Often, yes. It is the less obvious half of the lease price. The capitalized cost is the other half.