Frequently asked questions
What is a money factor and how does it relate to APR?
Money factor is the lease equivalent of an interest rate, expressed as a small decimal (e.g. 0.0025). Multiply by 2,400 to get the approximate APR (0.0025 × 2400 = 6%). This calculator accepts either format — enter APR (like 6) or money factor (like 0.0025).
What is residual value?
The predicted value of the asset at lease end. It is set by the leasing company based on depreciation projections. A higher residual means lower monthly payments because you are only paying for the depreciation during your lease period.
Is leasing cheaper than buying?
Monthly payments are usually lower, but you have no equity at the end. Leasing suits those who want a new vehicle every few years and predictable costs. Buying is cheaper long-term if you keep the vehicle beyond the loan payoff. Compare total cost of ownership over your intended timeframe.
Should I put money down on a lease?
A down payment reduces monthly payments but does not change total cost significantly. Unlike a purchase, a down payment on a lease is generally not recoverable if the vehicle is totaled or stolen. Many experts suggest keeping the down payment minimal.
What happens if I exceed the mileage limit?
You pay a per-mile penalty at lease end (typically $0.15–0.30 per mile over). If you expect to drive more than the allotted miles (usually 10,000–15,000/year), negotiate a higher limit upfront or consider purchasing instead.
Can I negotiate the money factor?
Sometimes. The money factor is tied to your credit score and the manufacturer's subsidized rates. You can often negotiate the selling price (capitalized cost) and trade-in value, which directly reduce the payment. Ask the dealer for the money factor — they are required to disclose it.