What is a good money factor for excellent credit?
around 3% to 5%
A decent money factor for a lessee with great credit is typically around 3% to 5%. If you have fantastic credit and you’re offered a lease with a money factor higher than . 0025 (or 6% APR) then it may be worth your time to shop around.
What is a high money factor?
If the money factor is a decimal followed by two zeroes and anything above 35 (0.0035), you’re getting an interest rate that would be at least 8.4 percent APR, which could be considered a high interest rate. If you’re not happy with the money factor you’re offered, it may be possible to negotiate something lower.
Is higher money factor better?
Money factor is an expression of the finance rate, similar to interest rate in a loan. The lower the money factor, the lower the lease payment, and the better the deal.
Can you negotiate money factor?
Rent charge or money factor Some dealers may say the rent charge — also known as the money factor — isn’t negotiable. Other dealers may mark up the rent charge to improve profit. The key is making sure this number is reasonable based on current interest rates and what other dealers are offering.
Why is 2400 the money factor?
2400 is the product of 3 consecutive conversion (1/2 * 1/12 * 1/100) to convert from an interest rate to a money factor. 6/2400 = Money factor of 0.0025 which can be multiplied against the total amount being borrowed to know what the monthly interest would roughly equal.
What is a money factor?
The money factor is the financing charge a person will pay on a lease. It is similar to the interest rate paid on a loan, and it is also based on a customer’s credit score. It is commonly depicted as a very small decimal. Multiplying the money factor by 2,400 will give the equivalent annual percentage rate (APR).
What is my money factor?
How do you calculate money factor?
money factor is calculated by taking the actual bank interest rate of the loan and dividing it by 2400, resulting in a decimal based number. For example a car lease with an 7% loan has a money factor of . 0029.
Is money factor based on credit?
Important. The money factor is directly determined by a customer’s credit score. The higher the credit score, the lower the money factor on a lease, and vice versa.
What is a standard money factor?
How do you find money factor?
The customer’s credit score determines the money factor. You can use the lease charge to calculate the money factor with this formula: Money Factor = Lease Charge / (Capitalized Cost * Residual Value) * Lease Term. Once you have the money factor, you can multiply it by 2,400 to convert it to an interest rate.