How this calculator works
Lease rent charges often use a small decimal money factor multiplied by the sum of adjusted capitalized cost and residual value. Multiplying that factor by 2,400 gives the commonly quoted approximate annual percentage number. It is a comparison convention rather than an actuarial APR calculation, and fees or payment timing can change the true financing cost.
Formula
Approximate annual rate in percent = money factor × 2400. With a fractional annual rate r, money factor = r/24.
Worked example
A money factor of 0.0025 corresponds to approximately 6% annually. An approximate 4.8% annual rate corresponds to a money factor of 0.002.
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Frequently asked questions
Why is the multiplier 2,400?
It combines twelve monthly periods, a factor of two for the lease balance convention and 100 to express a fraction as percent.
Is the converted number a legally disclosed APR?
No. Treat it as a rough comparison. The Federal Reserve notes that lease-rate disclosures do not follow a single mandatory federal formula.
Does this calculate the monthly lease payment?
No. The payment also depends on depreciation, residual value, capitalized cost, term, taxes and fees.