hamburger icon
Deals Articles

What's A Money Factor On A Lease?

Whether you finance or lease a vehicle, the lender or leasing company can charge you interest over the course of the loan term. Interest is the cost of borrowing money, and it's typically expressed as an annual percentage rating or APR. In auto leasing, the interest rate is expressed differently. It's called a money factor, sometimes also referred to as a lease factor or lease rate.

A money factor is expressed as a decimal, such as “0.0056.” To see your APR, you multiply it by 2,400. A lease with a 0.0056 money factor has an APR of 13.44%. Occasionally, you may see great lease deals with a money factor of 0.0005, which translates into an APR of 1.2%.

Typically, your money factor is non-negotiable when you lease a vehicle. Your credit score determines what tier you’re placed in – so the higher your credit score, the better your money factor is likely to be. The money factor you qualify for is also dependent on what rates the leasing company offers for their vehicles, and some deals are limited to those with better credit.

2024 Chevy Blazer

A decent money factor for a lessee with great credit, a credit score of 660 or above, is typically around 0.0025 or 6%. But, if you have fantastic credit and you’re offered a lease with a money factor higher than 0.0025 then it may be worth your time to shop around – a lease rate of less than 6% is usually offered to those with top-tier credit. For example, if you have excellent credit, a credit score in the high 700s or better, and aim to lease a 2024 Chevy Blazer for 36 months, you may have to settle for an APR of nearly 6% – 5.74% or 0.0024 – which is considered high for lessees with top-tier credit.

Alternatively, you could lease a Subaru Solterra EV with top-tier credit with a money factor of 0.00110, or 2.64% on the West Coast, which is a terrific deal, especially for a $46,220 electric vehicle. But, remember that a lease’s money factor is just one small part of your overall cost and monthly payment.

When you lease, you’re essentially “renting” the car and paying the leasing company for the time you have it. Over time, vehicles depreciate or lose value, and depreciation is what makes up the majority of your lease payment. Cars expected to hold their value well tend to have lower lease payments. Additionally, expect to pay other leasing fees such as a security deposit, disposition charge, acquisition fee, and tag/title/registration fees. And, depending on the state you live in, sales tax is typically rolled into your lease's monthly payment.

Shopping for the right lease deal means comparing all the parts of it: potential lease cash offers, loyalty bonuses, down payment requirements, leasing fees, and the money factor. You may see a deal with a high money factor, but has a great cash bonus – it's all about looking at the bigger picture.

Pictured: 2022 Hyundai Sonata (Top), 2024 Chevy Blazer (Middle)

Explore the Biggest Lease Deals This Month

Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.

Sign Up for Customized Deal Alerts

Subscribe to receive emails of the latest deals. Select list to join:

Related Articles

Is The Kia Sportage A Good SUV To lease? The 2023 Kia Sportage isn’t on-ground yet but it already has its first promotional lease deal. An unadvertised incentive bulletin sent to dealers t...
Typical Fees When Leasing A New Car When you're leasing a new car, there are a lot of fees and charge that you need to know about, some of which have to be paid upfront. However, it m...
What's The Average Credit Score For A Car Lease? The average credit score for a car lease rose three points year over year, according to the latest Experian data. This continues the trend we've se...
2024 Chevy Blazer EV Lease Rates Announced As of November 17, the Chevrolet Blazer EV is now available for a 36-month lease with promotional rates. Previously, the Blazer EV was excluded fro...
You Can Lease A Kia EV9 With Really Bad Credit You won't need perfect credit to lease a Kia EV9, and that could be good news for the roughly one-third of Americans with subprime credit. Based on...

Sign Up for Customized Deal Alerts

Subscribe to receive emails of the latest deals. Select list to join: