Lease Factor Calculator

Formula

To calculate the lease factor ($LF$):

\[ LF = \left( \frac{MLP}{VP} \right) \times 2400 \]

Where:

$LF$ is the lease factor
$MLP$ is the monthly lease payment ($)
$VP$ is the vehicle price ($)

What is a Lease Factor?

The lease factor, also known as the money factor, is a decimal number that represents the interest rate on a lease. It is used by leasing companies to calculate the portion of your monthly payment that is attributed to finance charges. The lower the lease factor, the less you will pay in interest over the term of the lease. It is an important number to understand when comparing lease options.

Example Calculation 1

Let's assume the following values:

Monthly Lease Payment ($MLP$) = $300
Vehicle Price ($VP$) = $20,000

Using the formula:

\[ LF = \left( \frac{300}{20000} \right) \times 2400 = 0.036 \]

The lease factor is 0.036.

Example Calculation 2

Let's assume the following values:

Monthly Lease Payment ($MLP$) = $400
Vehicle Price ($VP$) = $25,000

Using the formula:

\[ LF = \left( \frac{400}{25000} \right) \times 2400 = 0.0384 \]

The lease factor is 0.0384.