Every car lease has an interest rate, but almost no dealer calls it that. Instead of an APR you can compare against a loan or another dealer's offer, lease paperwork quotes a "money factor" — a small decimal like 0.00193 that tells you almost nothing on its own. That's not an accident. A number that's hard to compare is a number that's hard to negotiate.
The good news: converting a money factor to a real APR is one multiplication. This guide gives you the formula, a lookup table, a quick converter, and what counts as a fair rate versus a marked-up one.
The Formula
0.00208 × 2400 = 5.0% APR
0.00292 × 2400 = 7.0% APR
To go the other direction — if you know the APR you were quoted verbally and want to check it against the money factor on the contract:
Quick Converter
Money Factor ↔ APR
Money Factor Lookup Table
| Money Factor | Equivalent APR | Typical read |
|---|---|---|
| 0.00083 | 2.0% | Manufacturer-subvented promo rate |
| 0.00125 | 3.0% | Excellent credit, well-priced lease |
| 0.00167 | 4.0% | Good credit, normal range |
| 0.00208 | 5.0% | Fair credit, or a small dealer markup on excellent credit |
| 0.00250 | 6.0% | Worth questioning if your credit is strong |
| 0.00333 | 8.0% | High — ask for the base buy rate |
| 0.00400+ | 9.6%+ | Red flag — likely dealer markup |
How Dealers Mark It Up
Just like an auto loan, the lender quotes the dealer a "buy rate" — the actual rate the captive finance company is willing to lease at, based on your credit. The dealer is generally allowed to mark this up and keep the difference (sometimes called the "reserve") without disclosing it to you, unless your state requires otherwise.
A markup of even 0.0005 (about 1.2% APR) sounds tiny, but on a $30,000 cap cost over 36 months, that's roughly $500–$700 in extra lease cost — pure margin, with no product or service behind it.
What Counts as a Fair Rate
- Check the manufacturer's current lease specials page for your specific trim — many list the base money factor for the advertised lease deal directly.
- Compare the implied APR to current auto loan rates for your credit tier. A lease's implied APR should generally be at or below a comparable purchase loan rate, since the lessor retains the vehicle as collateral and keeps the residual value risk.
- If the dealer won't disclose the money factor at all — only a monthly payment — that alone is worth pushing back on. You can't evaluate a lease you can't see the rate on.
Already have a lease quote or signed contract?
Upload it to Ratifi and we'll pull the money factor, calculate the equivalent APR, and flag it if it looks marked up — along with every other number in the contract. Your first analysis is free.
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