What is a good money factor?
A competitive money factor in 2026 is around 0.001 to 0.0015, which translates to roughly 2.4% to 3.6% APR. Anything above 0.003 (7.2% APR) is considered expensive.
Free calculator
Car Lease Calculator
Estimate your monthly car lease payment using MSRP, residual value, money factor, and fees.
Last updated:
How lease payments are calculated
A car lease payment is made up of two parts: a depreciation charge and a finance charge (rent charge). The depreciation charge reflects how much value the car loses during the lease term. The finance charge is the interest you pay to the leasing company.
The residual value is the predicted worth of the car at lease end, expressed as a percentage of MSRP. A higher residual means less depreciation and a lower payment. The money factor is the lease equivalent of an interest rate — multiply it by 2,400 to convert to an approximate APR.
Monthly Depreciation = (Cap Cost - Residual) / Term Monthly Finance Charge = (Cap Cost + Residual) x Money Factor Payment = (Depreciation + Finance Charge) x (1 + Tax Rate)
Frequently asked questions
How is residual value determined?
The leasing company sets the residual based on the vehicle's expected depreciation. Vehicles that hold their value well (like Toyota and Honda) tend to have higher residuals, leading to lower lease payments.
Can I negotiate a car lease?
Yes. You can negotiate the capitalized cost (selling price), sometimes the money factor, and occasionally the acquisition fee. The residual value is set by the leasing company and is not negotiable.