Money Factor / Interest Rate on a Lease

[Ricks Lightning]

Looking to Lease a Flash for 3 years 10,500 annual Miles. 0 money in all rolled into the lease 36 payments.
This Labor day weekend has several cash incentives.
But what is the best Money Factor / Interest rate available for a lease ?
On a purchase I can still get 0 down, 0% interest. Not on a lease.

Why do some people refer to money factor and some interest rate. It’s like talking centigrade and Fahrenheit. Why do I have to be a mathematician to convert MF to interest rate.

Sorry for the short notice, but I need to make a decision by 9/3 before the Ford incentive stops.

Rick

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[MrLoganRoss]

If you want to eliminate all ambiguity around leasing and incentives then pay for a few months subscription to leasehackr. It’s legit and they have all the incentive finance info that is not available to us otherwise. It’s not just about making sure that the dealers don’t cheat you. It’s about making sure both you and the dealer maximize the deal for you. That includes them knowing the applicable info themselves.

case and point: I just leased a lightning (24).
-Of the three dealers I went to, none of their systems showed the $5500 X Plan program. They found it by manually entering in the program code I got through leasehackr
-All dealers are entitled to mark up lease interest rates. Dealers were calculating leases based on 3.99%. From leasehacker, I knew that the ford base interest rate was 1.18%. I negotiated to 2.18% - saving quite a bit of money.

 

[Ricks Lightning]

Thanks, I already knew about the 1.18 Ford numbers. But why do some call it a money factor and others interest rate..

Rick

 

[swajames]

Thanks, I already knew about the 1.18 Ford numbers. But why do some call it a money factor and others interest rate..

Rick

It's designed to confuse the consumer who, let's not forget, tends to be payment focused and doesn't normally pay as much attention to the details.

Leases generally use a money factor in the calculation. It's usually what looks like a very small number, for example 0.001. Part of the lease calc is to calculate the rent charge.

To get the rent charge, multiply the sum of the adjusted capitalized cost plus the residual by the money factor. The resulting rent charge is broadly the interest baked into the lease.

To convert a money factor to an APR, multiply it by 2400. So that 0.001 money factor drives to an APR or 2.4%.

 

[MrLoganRoss]

Thanks, I already knew about the 1.18 Ford numbers. But why do some call it a money factor and others interest rate..

Rick

They seem to be moving away from money factor terminology. Finance guys invited me behind the counter to see their screen. It showed as interest rate on their system. My discussions with them were in interest rate. Leasehackr shows both.

I think originally it was intended to avoid talking about interest rates as it is technically not a loan when you lease - you are buying a service (use of a car for a period of time). It definitely has been used to confuse. It seems like now there is growing comfort in talking about interest rates - the way it should have been all along.

 

[invertedspear]

That mileage is low. I will likely more than double that in my first year just because I love driving this thing so much.

 

[Firn]

That mileage is low. I will likely more than double that in my first year just because I love driving this thing so much.

Ha, I'm one month into ownership and at 5,000 miles!

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